NAB CEO Ross McEwan
NAB will pay a A$2.1 million fine for continuing to charge customers periodic payment fees when it knew it was overcharging.
ASIC said in a statement on Friday that the Federal Court ordered NAB to pay the penalty for “unconscionable conduct”. It said the bank knew it was not entitled to charge the fees but took over two years to stop charging them.
The court found that the cause of NAB’s wrongdoing was its inability to manage its computer systems and its unwillingness to apply sufficient resources to fix the problem in a timely manner.
The unconscionable conduct took place between January 2017 and July 2018. The bank charged 2888 personal banking customers and 513 business customers periodic payment fees on 74,593 occasions, with fees totalling $139,845.
Between 2007 and 2019, NAB’s terms and conditions said the bank would charge $1.80 for periodic payments to other accounts within NAB and $5.30 for periodic payments to accounts at another bank.
There were exemptions for certain payments, such as payments to home loan and personal loan accounts, and payments to certain savings accounts.
NAB charged the fees in cases where it should have applied the exemption and in other cases charged $5.30 when it should have charged $1.80.
The bank stopped charging all periodic payment fees in February 2019.
The court slammed NAB for “moral dereliction” and a “sense of entitlement” because it allowed the overcharging to continue while it searched for a solution to the system problem “without any great diligence”.
The court also said the maximum penalty of $2.1 million was “woefully insufficient” in the circumstances.
In addition to the penalty, the bank has paid around $9 million in remediation to customers who were charged incorrect periodic payment fees from August 2001.
ASIC noted in its statement that the since March 2019, the penalty for unconscionable conduct in breach of the ASIC Act is a minimum of $15.6 million.