ASIC launches legal action against NAB over fees-for-no-service scandal

ASIC has launched action against NAB over the group’s super fee-for-no-service scandal but has criminal wrongdoing.

(FILES) In this file photo taken on November 1, 2017 a woman walks past a National Australia Bank (NAB) branch in Sydney. National Australia Bank announced plans to sell down its wealth management arm on May 3, 2018 as it continues to offload assets to simplify its business. / AFP PHOTO / PETER PARKS

The corporate watchdog has launched proceedings against National Australia Bank in the Federal Court over the group’s superannuation fee-for-no-service scandal.

In a Federal Court lawsuit filed this morning, the Australian Securities & Investments Commission alleges NAB’s superannuation trustees NULIS Nominees and MLC Nominees misled super customers and deducted $33 million in fees from 220,000 savers without providing them any services. On top of this, a further $67m was taken from another 300,000 super savers where members didn’t receive any services, ASIC claims.

The bank could be facing a fine of up to $35.7m because, among dozens of alleged breaches of the law, are 21 counts of making false or misleading statements under a provision of the ASIC Act, 12DB, that can each attract a penalty of up to $1.7m.

And the bill could soar further if the court decides that every occasion NAB allegedly hoodwinked each of the hundreds of thousands of customers should count as a separate breach - the approach sister regulator Austrac took when taking the CBA to court over 53,000 breaches of anti-money laundering and counter-terror finance laws.

While breaking 12DB can be a crime, ASIC has stopped short of accusing NAB of criminal wrongdoing.

But the claim, which was foreshadowed in today’s Australian, comes as part of a series of detailed investigation currently underway into the wealth management industry which has earmarked about $850m in potential compensation for customers and follows explosive revelations about NAB’s wrongdoing exposed in evidence to the financial services royal commission.

ASIC claims NAB breached six sections of the Corporations Act, the Superannuation Act, and the ASIC Act in eight different instances.

The regulator’s allegations include multiple claims NAB breached its over-riding obligation to provide financial services efficiently, honestly and fairly, contained in a section of the Corporations Act that attracts no penalty when breached.

Executives from NAB were recently dragged onto the stand at the royal commission to explain the scandal and its lacklustre response to ASIC’s concerns.

The royal commission heard that although NAB has paid or agreed to pay more than $100m in compensation to hundreds of thousands of victims of the fee-for-no-service scandal, its unwillingness to fully confess to wrongdoing and compensate victims using ASIC’s preferred method had deeply aggravated the regulator.

ASIC is also understood also well advanced in its investigation of scandal-hit wealth manager AMP, which misled the regulator 20 times over its fees-for-no-service scandal.