Financial regulator ASIC is suing National Australia Bank in Federal Court over the fees-for-no-service scandal and is alleging thousands of violations of securities and corporate law.
ASIC says the bank charged financial planning fees from December 2013 to February 2019 on a large number of customers without providing them with any services, breaching its duty as an an Australian Financial Services licence holder to act efficiently, honestly and fairly.
NAB is also accused of engaging in “unconscionable conduct” by continuing to charge the fees from May 2018, when it knew it had not delivered the services, only stopping them in February.
The fee-for-no-services scandal was discovered last year by the financial services royal commission, which found it was widespread in the industry.
“ASIC views these instances of misconduct as systematic failures, unfair to customers including those that are more vulnerable,” said ASIC deputy chairman Daniel Crennan.
The maximum penalty for the alleged misconduct ranges from $250,000 to $2.1 million per violation of the law, the Australian Securities and Investment Commission (ASIC) said.
“We take this action seriously and will now carefully assess the allegations,” NAB’s chief legal and commercial counsel Sharon Cook said.
“We will continue to work co-operatively and constructively with ASIC to deal with this issue.”
NAB said it had already acknowledged failures where clients have paid fees for services the didn’t receive, and repaid $37.8 million to 27,500 NAB clients.
NAB said it began switching off fees for all clients with ongoing fee arrangements in February and refunded all ongoing fees paid by clients after May 31.
“NAB Financial Planning has made changes to systems and controls and will continue to improve so we can service our clients better,” Ms Cook said.