NAB’s MLC and NULIS businesses slapped with $57.5m court penalty over fees for no service

The Federal Court has penalised the bank’s MLC and NULIS arms for wrongdoing fleshed out in the royal commission.

The case against case against NAB, its wealth unit MLC and superannuation trustee NULIS, centred on fees charged to superannuation members for services that were not provided. Hollie Adams/The Australian

National Australia Bank and its entities have been slapped with a $57.5m penalty by the Federal Court, after admitting to wrongdoing including making “false or misleading” statements to customers on fees.

The Australian Securities and Investments Commission’s case against NAB, its wealth unit MLC and superannuation trustee NULIS, centred on fees charged to superannuation members for services that were not provided.

Judge David Yates on Friday ordered MLC Nominees pay a penalty of $49.5m for contravening the law, while NULIS was hit with an $8m penalty.

“I will grant the declarations and make the other orders that the parties, by agreement, propose,” he said in a judgment.

“The court puts a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene. The penalty should make it clear to the contravener and others that the cost of courting risk cannot be regarded as an acceptable cost of doing business.”

Following a period of mediation the hearing was before the court to determine a penalty, after being delayed by the onset of COVID-19. The case appears to be a big win for the regulator, following revelations that were fleshed out in damning hearings during the 2018 Hayne royal commission.

NAB’s head of legal and commercial services Sharon Cook accepted the penalty on Friday.

“With this legal matter resolved and important lessons learned, we are now moving forward and are focused on serving our customers well,” she said.

“Customers should never have been charged for a service that was not received, and NULIS and MLCN should have made it clearer that customers could switch off the Plan Service Fee.

“NULIS and MLCN stopped charging Plan Service Fees by November 2018. Members from whom the fee was deducted have been fully compensated, including being paid interest. A total of $117m was paid to members and payments were made by May 2019.”

The judgment found members of MLC MasterKey super products were misled and it referenced “defective” product disclosure statements.

The case included claims that NULIS and MLC Nominees deducted more than $33m in service fees from 220,000 members of MLC MasterKey Business and MLC MasterKey Personal Super who did not have plan advisers.

NAB also deducted about $67m in plan service fees from 300,000 members of MLC MasterKey Personal Super, where plan advisers were not required to provide services and members did not receive any.

The judgment said contraventions of the law could occur even though there wasn’t intentional wrongdoing.

“ASIC accepts that the facts before the Court do not permit a finding that MLC Nominee’s or NULIS’ conduct was deliberate,” it added.

NAB — which last month agreed to sell MLC to IOOF — was also ordered to pay ASIC’s costs of $834,620.

The penalty action was part of ASIC’s broader investigations into fee-for-no-service failures in the financial sector.

The regulator had also imposed extra licence conditions on NULIS due to concerns about its pattern of breach notifications in 2015 and 2016.