NAB may face more than 100 ‘criminal actions’ ASIC probe reveals

The NAB could face fines of just $10m even though it’s accused of more than 100 potential criminal offences.

Details of the Australian Sec­urities & Investments Commission’s investigation into the NAB have been revealed.

The National Australia Bank could face fines of just $10 million even though the corporate regulator has accused it of more than 100 potential criminal offences over scandals, including charging fees to people who got nothing in return.

Details of the Australian Sec­urities & Investments Commission’s investigation into the NAB were revealed yesterday by fin­ancial services royal commissioner Kenneth Hayne, who rejected a last-ditch bid by the bank to keep the probe secret.

Documents shown to the commission reveal ASIC officers accused the NAB of being “out of step” with the rest of the industry when it came to compensating customers charged fees for no service and failing “to engage at all with the serious concerns outlined by ASIC” and lacking “any insight into the seriousness of the suspected misconduct”.

The Australian understands ASIC’s ongoing investigation is a high priority for the regulator, which is yet to decide whether to strike a deal with NAB, take civil action against the bank or pursue criminal prosecution.

ASIC accuses the NAB of two counts of making false or misleading statements to customers by failing to tell them they could “turn off” one of its fees, the “plan service fee”, and another 110 counts of failing to promptly tell the regulator about important breaches of its financial service licence conditions across the bank, documents tendered to the royal commission show.

The NAB has told ASIC it can find only 84 instances where it blew through the 10-day deadline to file significant breach reports between 2014 and last year.

Penalties for corporate wrongdoing are to be dramatically increased by the Turnbull government, but the changes are yet to take effect.

On Wednesday, Mr Hayne raised the prospect that ASIC might launch a criminal proceeding and asked a witness for the NAB, Nicole Smith, whether she thought “taking money to which there was no entitlement raised a question of the criminal law”.

Last night, NAB’s chief executive, Andrew Thorburn, said the bank had “let down” customers by charging fees for no service but insisted it was “very clear” that bank employees had not committed crimes.

“I stressed that to our people today,” Mr Thorburn said.

“(What’s happened) sounds really serious but it’s not about fraud — it concerns potential breaches of the Corporations Act.”

In March, as the NAB braced for its first appearance at the commission, Mr Thorburn said the bank was “committed to fully participating and co-operating with the royal commission”.

“My commitment to you is that you will see NAB act throughout the royal com­mission and beyond in an open and transparent way,” Mr ­Thorburn said in an open letter to customers.

However, evidence before the commission yesterday revealed that both its staff and the regulator had concerns that the NAB was unco-operative.

Mr Hodge said that of 3500 documents the bank delivered to the commission over fees for no service, 3000 arrived just last week, even though they were required to be handed over a month ago.

As recently as June 28, ASIC wrote to the NAB’s chief legal ­officer, Sharon Cook, and Ms Smith, who was chairwoman of the bank’s super trustee ­company, to complain about a lack of progress in compensating customers.

On Wednesday, counsel for the bank, Neil Young QC, succeeded in stopping Mr Hodge using the trove of ASIC documents until yesterday morning.

Mr Hayne yesterday tossed out the NAB’s secrecy bid, saying it was “to be noted that it would be in the interests of NAB to pay the least sum available by way of remediation”.

with Richard Gluyas