NAB sued by ASIC for allegedly failing 345 customers in hardship

National Australia Bank is facing federal court for allegedly failing 345 customers at their most vulnerable when they applied for hardship support.

NAB has been taken to federal court amid allegations it did not help hundreds of customers in need.

According to Federal Court documents, ASIC alleges between 2018 and 2023 NAB and its subsidiary AFSH Nominees Pty Ltd did not respond to these impacted customers within a 21-day time frame required by law.

Under the Australian Credit Code, banks are required to respond to hardship notices within 21 days, giving the customer details on how the bank will respond.

The alleged wrongdoing by NAB is similar to charges Westpac faced in September last year, when ASIC claimed the bank failed to process hardship notices for at least 229 customers between 2015 and 2022 within the required time frame.

In court papers filed on Monday morning, the Australian Securities and Investments Commission alleges NAB and its subsidiary AFSH Nominees failed customers who were suffering from domestic violence, medical emergencies, and those locked inside in response to the Covid-19 pandemic, breaching laws that had been in place for almost 11 years.

NAB has allegedly failed 345 customers during their time of need. Picture: NCA NewsWire / Kelly Barnes

ASIC Chair Joe Longo alleged NAB unlawfully failed to respond to their customers’ appeals for help when they needed them most.

“These customers included people who were domestic violence victims, battling serious medical conditions, dealing with business closures or job loss. NAB’s failures likely compounded the already challenging situation for these people,” he said.

“Amid rising cost of living pressures, we have seen an increased number of customers reach out to their lenders for relief, and we have seen first-hand the impact on lives and livelihoods when lenders fail to appropriately support customers experiencing financial hardship.”

In a statement to the stock exchange, NAB acknowledged the legal action and said it disclosed the issue to ASIC in October 2023.

On Monday morning, NAB acknowledged the civil penalty proceedings commenced against it and AFSH Nominees by ASIC in the Federal Court.

Group executive of customer corporate services, Sharon Cook, apologised for what happened to the impacted customers.

“We’re sorry that this happened when a number of our customers were in difficult situations and needed us to be there for them,” Ms Cook said.

The alleged breaches came between 2019 to October 2023. Picture: NCA NewsWire / John Gass

”We are focused on ensuring these customers receive the support they need.”

The bank said it has since worked on a new approach for dealing with hardship, including consulting with consumer advocates.

”When Australians are in financial difficulty, their bank should treat a request for support fairly and promptly,” said Peter Gartlan, the co-CEO of Financial Counselling Australia.

NAB advised that it is now considering the detail of the proceedings brought by ASIC and will continue to co-operate fully with the regulator.

Shares in NAB fell 1.78 per cent to $38.52 at the time of writing.