The Federal Court ordered the penalty for failures related to misleading fee disclosures
The Federal Court has ordered National Australia Bank to pay an $18.5 million penalty for failures related to misleading fee disclosure statements.
The court also found that NAB failed in its obligations as an Australian financial services licence holder to act efficiently, honestly and fairly by failing to have procedures and systems in place to provide timely and effective fee disclosure statements, according to the Australian Securities and Investments Commission.
“NAB’s system failures resulted in significant fee-disclosure failures over an extended period,” said Sarah Court, ASIC deputy chair. “This caused harm to customers, as the inaccurate information meant they couldn’t make informed decisions about the financial services they were paying for. 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.”
The Federal Court found that NAB had violated the law on numerous occasions when it:
- Charged fees for personal advice without giving customers compliant fee disclosure statements
- Failed to provide clients with fee disclosure statements within the required time frame
- Made false or misleading representations in fee disclosure statements about the amount clients had paid for services and the services they received
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The court also found that the bank had failed to establish or maintain systems and procedures to identify whether:
- Services were provided in accordance with client service agreements
- Its fee disclosure statements were compliant
- It was prohibited from charging service fees
“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.
This is the first penalty imposed by the Federal Court for fee disclosure statement failures under the Corporations Act. In addition to the penalty, NAB has been ordered to pay ASIC’s costs.
