The numbers are puny but the consequences for National Australia Bank may be material depending on the facts and any admissions around an all too familiar episode of “unconscionable conduct and misrepresentations over account fees”, or so ASIC alleged yesterday.
The origins of this affair date from 20 years ago, and on the bank side, remains a work-in-progress to resolve.
There is a definite sense of royal commissioner Kenneth Hayne’s mandate: “The critical question whenever ASIC is considering any contravention of the law must be … ‘Why not litigate?”, with ASIC suing NAB.
ASIC said it commenced proceedings in the Federal Court against National Australia Bank “alleging that NAB charged fees for making certain periodic payments when it was not entitled to under the bank’s contracts with its customers”.
ASIC alleges that between 25 February 2015 and 22 February 2019, NAB charged fees for periodic payments on at least 195,305 occasions totalling A$365,454 when it was not contractually entitled to do so.
These fees were charged to 4,874 personal banking customers and 913 business banking customers.
NAB, in a statement, said it “acknowledges that it charged some customers incorrectly for periodical payment fees because staff members selected an incorrect fee when setting up a payment arrangement for a customer”.
NAB said it was conducting a remediation program and to date “NAB has made payments to customers totalling more than $8 million”.
The concise statement published by ASIC to begin the Federal Court proceedings amplifies the allegations, including:
• between at least January 2017 and 22 February 2019, NAB continued to charge customers periodic payments fees “even though it knew that overcharging was occurring and it did not have systems to prevent those fees being charged incorrectly”;• NAB “did not change its systems in relation to the fees to prevent overcharging until 22 February 2019, when it ceased to charge customers fees”;• NAB “first identified the risk of overcharging in September 2016 [yet] NAB knew [of] overcharging …. from at least February 2002”;• It took NAB until July 2018 to notify ASIC (and also customers) of the overcharging, with the bank then bracing for a testing (and ultimately humiliating) examination at the banking royal commission; and• NAB began remediation, ASIC alleged, “based on an incorrect view that the data available to it … was unreliable, and so it calculated remediation for customers for amaximum period of seven years from October 2011”, and thus neglecting to compensate customers affected over the 10 years prior.
NAB, on the ASIC version, still “has not compensated all customers who were incorrectly charged periodic payments fees, because funds have not reached some customers”.
In 2005, NAB was exposed as having wrongly charged bank accounts debit tax for around five years, affecting tens of thousands of customers, an affray that led to a hefty compensation bill but no court time and a behind-the-scenes coming clean with ASIC .
The matters at the centre of ASIC’s latest allegations will have been known to NAB at the time it drafted the compulsory self-assessment, published in December 2018.
Ernst & Young conducted a