National Australia Bank and one of its subsidiaries will pay a $15.5million fine to the Commonwealth after failing to respond to hundreds of hardship applications.
In a Federal Court decision made on Wednesday, the bank was found to have failed to respond to 345 hardship applications within the legally required 21-day timeframe.
Affected consumers were left unaware of the outcome of their hardship applications between 2018 and 2023.
Justice Penny Neskovcin said affected customers had asked the bank for help as they weathered medical emergencies, family violence, natural disasters, redundancy and business failures.
ASIC Deputy Chair Sarah Court said the decision ‘highlights the seriousness of the failures of NAB and [subsidiary] AFSH to support their customers experiencing financial hardship’.
‘These failures likely made an already challenging time in people’s lives far worse.
‘This penalty sends an important message to other financial institutions – customers should be at the centre of what you do.’
Justice Neskovcin found NAB and AFSH breached provisions of the National Credit Code.
NAB failed to respond to hundreds of hardship applications between 2018 and 2023 the Federal Court has found (above, pedestrians on George Street, Sydney)
The provisions require the bank provide ‘…an important formal mechanism to protect consumers who may be experiencing hardship’.
Justice Neskovcin also found adverse impacts to customers ‘may have been avoided if NAB had provided the affected NAB customers and AFSH customers with the required notices in response to their hardship notices’.
NAB and subsidiary AFSH, operating as Advantedge, will also be required to publish an adverse publicity notice on their websites and provide a copy of the notice to affected customers.
The notice will inform customers of Justice Neskovcin’s court order.
‘The failures resulted (with a few limited exceptions) from the incorrect use by NAB staff of a particular functionality in its internal system used to manage hardship notices,’ the notice will read.
‘The causes have since been identified and NAB has taken steps to address those causes.
‘Since ASIC commenced court proceedings, NAB and ASFH have provided affected customers with a response to their hardship notice and conducted a remediation program which included remediation payments and the correction of repayment history information for some affected customers.’
The bank has agreed to pay ASIC’s costs.
The bank faces a $15million fine and will cover ASIC’s court costs following the decision (above, pedestrians pass a NAB branch in central Sydney)
In May last year, ASIC released a report stating lenders were not doing enough to support customers experiencing financial hardship.
‘The hardship regime exists to help customers who are experiencing financial difficulty, often caused by significant life events such as serious illness, sudden unemployment and domestic violence,’ Ms Court said.
‘ASIC will not hesitate to take action when banks and lenders fail to comply with their obligations.’
The majority of customer hardship applications related to home and credit card loans.
