NAB admits to multiple breaches in fees for no service case but denies unconscionable conduct

While the bank has admitted to multiple breaches, it has rejectedallegations of unconscionable conduct in the fees for no service case.

ASIC has alleged that NAB charged fees but failed to provide financial planning services to a large number of customers from December 2013 to February 2019.

National Australia Bank has admitted to multiple breaches of the Corporations Act in relation to last November’s fees-for-no-service case brought by ASIC.

However, NAB has drawn a line in the sand in relation to allegations of unconscionable conduct.

In its defence document lodged with the Federal Court on Friday, NAB denied that its conduct in charging ongoing fees from May 2018 to February 2019 was unconscionable.

The bank said it was necessary for the court to consider all the relevant circumstances, including NAB’s ongoing improvement of its systems and controls, and its response to the issues of concern to ASIC.

NAB also provided remediation and refunds of ongoing fees where it was appropriate.

ASIC started civil penalty proceedings in the Federal Court against NAB last November, alleging several thousand contraventions of the ASIC Act and the Corporations Act.

The regulator said NAB, from December 2013 to February 2019, charged fees but failed to provide ongoing financial planning services to a large number of customers.

According to ASIC, the bank also failed to issue fee disclosure statements, or issued defective FDSs which contained false or misleading information in that they did not accurately describe the fees the customer paid or the services the customer actually received.

The defective or out-of-time FDSs allegedly terminated the ongoing fee arrangements between NAB and its customers, making it unlawful for the bank to continue to charge the fees.

ASIC also claimed NAB failed to establish and maintain compliance systems and processes to detect and prevent these failures.

ASIC is seeking declarations, penalties and compliance orders from the Federal Court to prevent similar contraventions occurring in the future.

“When the fees-for-no-service misconduct is coupled with FDS inadequacies or failings, customers are potentially placed in a more disadvantageous position,” ASIC deputy chairman Daniel Crennan said at the time.

“The customer may not therefore have been provided with the opportunity to know whether they have received the services for which they have paid or the amount of fees charged to them.”

NAB admitted in some cases it was wrong to have charged customers ongoing service fees.

However, the bank said it breached the Corporations Act on less than 650 occasions instead of the 8927 instances alleged by ASIC.

“NAB regrets these failures and apologises to its customers for not meeting their expectations and for contravening the law,” NAB said in its defence.