Say ‘No’ to Fees for No Service
ASIC commenced civil penalty proceedings against National Australia Bank Limited (NAB) in the Federal Court and seeks findings of several thousand contraventions of the ASIC Act and the Corporations Act.
ASIC alleges that from December 2013 to February 2019, NAB:
- engaged in Fees for No Service Conduct by failing to provide ongoing financial planning services to a large number of customers while charging fees to those customers;
- failed to issue, or issued defective, fee disclosure statements (FDSs). ASIC alleges that the defective FDSs contained false or misleading representations in that they did not accurately describe the fees the customer paid and/or the services the customer actually received. The provision of the defective or out-of-time FDSs terminated the ongoing fee arrangements between NAB and its customers and it is ASIC’s case that consequently NAB was not lawfully entitled to continue to charge the fees;
- failed to establish and maintain compliance systems and processes to detect and prevent these failures; and
- contravened its overarching obligations as an Australian Financial Services licence holder to act efficiently, honestly and fairly.
ASIC also alleges that NAB engaged in unconscionable conduct from around May 2018 as they continued to charge ongoing service fees to certain customers when they knew no such services were provided. Despite being aware they had issued defective FSDs, NAB did not stop charging fees to customers until 4 February 2019.
Consequently, ASIC is seeking declarations, pecuniary penalties and compliance orders from the Federal Court to prevent similar contraventions from occurring in the future.
The maximum civil penalty for contraventions alleged against NAB are:
- $250,000 per contravention for breaches of s962P of the Corporations Act 2001 (Cth) (charging ongoing fees after the termination of an ongoing fee arrangement) and s962S (failing to provide a timely FDS); and
- $1.7 to $2.1 million maximum penalty (depending on the time period) per contravention for breaches of s12CB (unconscionable conduct) and s12DB (false or misleading representations).
 ASIC, ‘19-360MR ASIC takes court action against NAB for fees for no service and fee disclosure statement failures’, media release, https://asic.gov.au/about-asic/news-centre/find-a-media-release/2019-releases/19-360mr-asic-takes-court-action-against-nab-for-fees-for-no-service-and-fee-disclosure-statement-failures/.