NAB Fined $2.1 Million Over Nabbing Unauthorised Fees
Australia’s second-biggest lender, National Australia Bank (NAB.AX), was fined by the Federal Court $2.1 million for improperly charging consumers recurring payment fees.
The bank was not only being found of wrongfully charging payment fees on 74,593 occasions, totaling $139,845, but also NAB acknowledged closing regional branches despite increased activity in the same week.
According to the Financial Review, the bank wrongfully charged overcharged about 5700 customers between January 2017 and July 2018.
Further, the Australian Securities & Investments Commission (ASIC) said NAB continued to charge its consumers periodic payment fees for transferring money despite understanding it had no legal right to do so under their contracts.
“If systems have let customers down, we expect all financial institutions, especially our banks, to act quickly to reduce consumer harm,” ASIC Deputy Chair Sarah Court said.
For over 18 months, NAB “obviously” looked after its commercial interests over its obligations to its clients, Federal Court Justice Roger Derrington said.
“In a context where NAB has been a repeat offender against the financial services legislation in this country and, as this case and others reveal, it appears to place a low priority on respecting the legal rights of its customers, a penalty several times the statutory maximum would have been far more appropriate,” Derrington wrote.
Initially, the fees were charged due to human error when the automated payments were set up by NAB staff, and while select customers were given a fee exemption, they did not obtain it; others were paid a fee of $5.30 when the accurate fee should have been $1.80.
“While NAB promptly set up internal investigations into these issues, which continued over time and eventually ascertained the identity of the persons adversely affected by its errant system, it was unable to determine how to remedy the system’s dysfunctionality, short of shutting it down altogether,” Derrington wrote.
NAB has expressed regret over the unauthorised fees and said it launched a $8.3 million remediation program.
“We acknowledge some customers were incorrectly charged for periodical payment fees several years ago. This issue related to the incorrect fee selection by NAB when setting up a payment arrangement within personal and business banking accounts,” a spokesman said.
According to the ASIC, NAB could have been found liable for a penalty for each of the 74,593 incorrect fees, a maximum penalty of around $130 billion, but for now, NAB has only been penalised for a single violation.