Australia’s Federal Court has ordered NAB to pay a penalty for contravening “its obligations as an Australian financial services licence holder to act efficiently, honestly and fairly”.
Deputy chair of the Australian Securities and Investments Commission (Asic), Sarah Court, said: “NAB’s system failures resulted in significant fee disclosure failures over an extended period.
“This caused harm to customers as the inaccurate information meant they couldn’t make informed decisions about the financial services they were paying for.”
She added: “The penalty of A$18.5m (£9.8m, $13.4m, €11.4m) handed down to NAB is a timely reminder to financial services licensees to ensure they meet their obligations to clients.”
It is the first such penalty imposed by the court for fee disclosure statement failures.
Multiple issues
The Federal Court found NAB breached the law on numerous occasions.
These included:
- Charging fees for personal advice without giving customers compliant fee disclosure statements;
- Failing to provide fee disclosure statements to clients within the time required;
- Making false of misleading representations to clients about the services they paid for versus those rendered.
The court also found that NAB had not established or maintained systems and procedures to identify whether services were provided in accordance with client service agreements.
Legal ruling
In her decision, justice Davies said that fee disclosure statement obligations “are specific consumer protection measures enacted for the safeguard of the interests of clients subject to ongoing fee arrangements and they are strict obligations, underscoring the seriousness of the contravening conduct”.
The court, however, acknowledged NAB’s efforts to make early admissions of liability and took this into account in determining the penalty.
NAB has also been ordered to pay Asic’s costs.
