NAB accepts hefty fine for defective FDS

ASIC alleged NAB failed to issue or issued defective fee disclosure statements in December 2019.

The long-running case was resolved with the Federal Court confirming the size of the fine would be $18.5 million.

The judgement shows that ASIC alleged the fine should have been in the region of $40 million, however, NAB argued that this would have been unfair.

The Federal Court agreed in its judgement, stating a fine of $40 million would have been excessive.  

In the judgement, NAB had argued that the continuation of charges after May 2018 should not be considered as a significant aggravating factor.

The bank claimed that from this time they were investigating the scale of the non-compliance, as well as taking steps to improve compliance measures.

The judgement concluded that NAB still ran risks of contravention despite this, as the bank continued to charge clients ongoing fees after May 2018.

However, it did not accept that this was precedent for issuing NAB with a higher penalty.

The judgement also rejected NAB’s classification that the misconduct falls at the less serious end of the spectrum.

ASIC has stated that they hope the penalty against NAB will encourage other licensees to ensure they provide a level of service that inspires client confidence in the industry.

“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,” said ASIC deputy chair Sarah Court.

In accepting the fine, NAB has reinforced its message that it has gone to reasonable lengths to make amends to clients affected by the misconduct.

“To address this issue, NAB stopped charging ongoing service fees to customers of its former NAB Financial Planning business in 2019,” NAB group executive, legal and commercial services, Sharon Cook said.

“In 2020, we established a remediation program which has to date paid approximately $31m to more than 15,000 customers in order to make things right.”