The Federal Court has ordered National Australia Bank (NAB) and its subsidiary, AFSH Nominees Pty Ltd (AFSH), to pay a pecuniary penalty of $15.5 million for failing to respond to customers facing hardship.
The Court found that between 2018 and 2023, NAB and AFSH failed to respond to 345 hardship applications within the 21-day timeframe required by law. As a result, those consumers remained unaware of the outcome of their hardship applications.
ASIC Deputy Chair Sarah Court said, 'This decision highlights the seriousness of the failures of NAB and 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.'
In handing down her decision, Justice Neskovcin found that the provisions of the National Credit Code breached by NAB and AFSH provide '…an important formal mechanism to protect consumers who may be experiencing hardship…' and that 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 within the prescribed timeframes'.
Further, her Honour stated, 'The total number of admitted contraventions of s 72(4) is high, indicating the significant scope - and thereby the seriousness - of the contravening conduct.'
NAB and AFSH are also required to publish an adverse publicity notice on their respective websites and to provide a copy of the notice to each customer affected by the conduct. NAB and AFSH have agreed to pay ASIC's costs.
In May 2024, ASIC put the lending industry on notice with the release of its hardship report which found that lenders were not doing enough to support their 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'.
'ASIC will not hesitate to take action when banks and lenders fail to comply with their obligations, ' Ms Court said.
