The Australian Federal Court has levied a fine of USD 1.4 million on National Australia Bank (NAB), one of the country’s leading banks, for unjustly imposing periodic payment fees on its customers. From January 2017 to July 2018, NAB inappropriately charged these fees for fund transfers, despite their contracts not permitting such charges.
The Australian Securities & Investments Commission (ASIC) identified this malpractice, noting that NAB wrongly charged 2,888 individual and 513 business accounts, leading to fees of AUD 139,845 on 74,593 separate occasions.
Sarah Court, ASIC’s Deputy Chair, stressed the importance of banks acting promptly to reduce consumer harm when discrepancies arise. NAB, in an email to Reuters, admitted to the oversight, stating that they had mistakenly charged some clients for periodic payment fees a few years back. They further mentioned that they had initiated a compensation program, refunding more than AUD 8.3 million to the impacted parties.
It’s worth noting that several Australian firms have faced penalties for regulatory breaches, with the major ‘Big Four’ banks receiving the heftiest fines. This comes in the wake of a Royal Commission’s probe into the banking sector, which unveiled extensive malpractices.
In December 2017, a royal commission was initiated to investigate misconduct in the Australian banking sector. The investigations uncovered regulatory oversights, involvement in money laundering, and negligence towards terrorism financing. Notably, the NAB subsidiary, MLC Limited, was found to have charged customers fees without providing services, attempting to mask these as commissions. ASIC later alleged that NAB deducted $100 million in unearned fees from over 300,000 customers.
