The Federal Court has ordered National Australia Bank (ASX: NAB) to pay an $18.5 million penalty for failures relating to misleading fee disclosure statements, resulting in customers being unable to make informed decisions.
The Court also declared NAB contravened its obligations as an Australian financial services licence holder to act efficiently, honestly and fairly by failing to have systems in place to provide timely and effective disclosure statements to customers about fees.
“NAB’s system failures resulted in significant fee disclosure failures over an extended period. This caused harm to customers as the inaccurate information meant they couldn’t make informed decisions about the financial services they were paying for,” Australian Securities and Investment Commission chair Sarah Court said.
“The penalty of $18.5 million handed down to NAB is a timely reminder to financial services licensees to ensure they meet their obligations to their clients.”
NAB was found to have breached the law on numerous occasions when it charged fees for personal advice without giving customers fee disclosure statements, failed to provide statements within the time required, and made false or misleading representations to customers about the amount they had paid for services and the services which they had received.
The Court also found NAB had not established or maintained systems and procedures to identify whether services were provided in accordance with client service agreements.
“Customers need to have confidence in their financial services providers that they will be charged correctly for the services they receive and given accurate and timely information,” Court said.
In her decision, Justice Davies observed that fee disclosure statement obligations “are specific consumer protection measures enacted for the safeguard of the interests of clients subject to ongoing fee arrangements and they are strict obligations, underscoring the seriousness of the contravening conduct.”
NAB group executive, legal and commercial services, Sharon Cook today apologised to impacted customers.
"To address this issue, NAB stopped charging ongoing service fees to customers of its former NAB Financial Planning business in 2019," Cook said.
"In 2020, we established a remediation program which has to date paid approximately $31 million to more than 15,000 customers in order to make things right."
Shares in NAB are down 0.87 per cent to $27.44 per share at 2.32pm AEST.
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