ASIC has commenced proceedings in the Federal Court against National Australia Bank Ltd (NAB), 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 between 25 February 2015 and 22 February 2019, NAB charged fees for periodic payments on at least 195,305 occasions totalling $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.
ASIC alleges that by charging the fees, or by notifying customers of the charging of each fee via a bank statement, NAB:
made false or misleading representations that it was contractually entitled to charge the fees when it was not;
engaged in misleading or deceptive conduct; and
contravened its obligation as an Australian financial services licensee to comply with financial services laws.
NAB had identified that it was charging periodic payment fees in error to both personal and business banking customers by the end of October 2016. However, it took NAB until July 2018 to lodge a breach report with ASIC and notify customers of the overcharging, and to begin remediating customers.
ASIC alleges that between at least January 2017 and July 2018, NAB continued to charge customers periodic payment fees even though it knew overcharging was occurring and did not have systems to prevent those fees from being charged incorrectly. NAB did not change its systems to prevent overcharging until 22 February 2019, when it ceased to charge those fees to customers.
ASIC alleges between January 2017 and July 2018, NAB engaged in unconscionable conduct and contravened its obligations as an Australian financial services licensee to ensure that financial services covered by its licence were provided efficiently, honestly and fairly by:
continuing to charge periodic payment fees to customers in circumstances where it knew that it had no contractual entitlement to do so; and
failing to inform customers about the wrongful charging of fees, or suggest that customers review the periodic payment fees charged to their accounts.
ASIC also alleges that between 25 February 2015 and 22 February 2019, NAB failed to provide financial services efficiently, honestly and fairly by:
imposing periodic payment fees on customers when it had no contractual entitlement to do so; and
failing to have adequate systems and processes to:
ensure that periodic payment fee overcharging did not occur;
detect periodic payment fee overcharging when it did occur; and
identify and remediate affected customers.
The proceeding will be listed for a case management hearing on a date to be determined by the Court.