A Federal Court judge who handed NAB the maximum $2.1 million penalty for continuing to charge its customers despite knowing the fees were wrong said the punishment was not enough to deter the banking giant from engaging in similar conduct again.
National Australia Bank (NAB) has been ordered by the Federal Court to pay the Commonwealth of Australia $2,100,000 for contravening the Australian Securities and Investments Commission Act 2001 between January 2017 and July 2018.
NAB charged 2,888 personal banking customers and 513 business banking accounts periodical payment fees (PP Fees) where it knew it had no contractual agreement to do so and failed to inform its customers about the wrongful charging on their accounts.
The PP Fees were charged on 74,593 occasions and totalled $139,845.90. On average, each of the personal banking and business banking customers were charged $41.11.
All but 72 affected customers have been paid remediation.
Justice Roger Derrington said rather than “shut the dysfunctional system down” while the bank investigated the wrongful charging of the PP Fees, NAB chose to protect its commercial interests.
“In this time, no one within the bank formed the view that, regardless of the financial consequences, it was inappropriate to continue withdrawing money from customers’ accounts in the absence of any authorising mandate,” Justice Derrington said.
Viewed against NAB’s “repeated” offending against financial services legislation, Justice Derrington said it appears the banking giant “places a low priority on respecting the legal rights of its customers”.
“It deliberately and cynically took advantage of its customers’ unawareness and was prepared to allow the overcharging to continue whilst it searched, admittedly in good faith, but without any great diligence, for a solution,” Justice Derrington added.
“Such moral dereliction would seem to reflect an inherent sense of entitlement, possibly precipitated by a view that no real harm would come to the bank even if its conduct was detected.”
As the court concluded there was just one contravention, the maximum penalty that could be imposed is the $2.1 million.
Justice Derrington said this was “regrettable” as only a substantial penalty could deter NAB from engaging in similar conduct again.
“The maximum penalty of $2.1 million is unlikely to have any real impact on the bank’s future conduct,” Justice Derrington said.
Yes – banks for a long time have charged fees for no service and imply fees that don’t exist eg when we buy from an Australian business with an abn and pay to an Australian bank account but the business transfers the funds to overseas owner, banks charge us an “international” dealings fee when in fact, the business pays the international transfer and FX fees at time of their payment so instead of the bank receiving that 1 fee, they duplicate their income by charging all the individual fees to us along the way.