National Australia Bank says it is working to rebuild customer trust after becoming the first player in the financial services industry to face court action over charging fees for no service.
NAB could incur millions of dollars in fines after charging hundreds of thousands of superannuation customers $100 million in fees for services they did not receive.
The Australian Securities and Investments Commission wants the Federal Court to impose a civil penalty and declare NAB’s superannuation trustees NULIS and MLC Nominees broke financial services laws.
The case centres on the trustees deducting about $100 million in plan service fees from the account balances of hundreds of thousands of members of MLC MasterKey Super products.
ASIC took the legal action despite NAB compensating customers.
NAB’s chief legal and commercial counsel Sharon Cook said the bank will carefully consider the allegations.
‘We are acting to rebuild trust with our customers,’ Ms Cook said in a statement.
‘Our announcement this week about removing grandfathered commissions from NAB Financial Planning and NAB Direct Advice, as well as accelerating repayments where fees have been wrongly charged, are more steps in this direction.’
NAB paid $35.9 million in remediation after deducting plan service fees from 220,000 MLC MasterKey business and personal super members who did not have plan advisers.
It is paying another $87 million – $67 million in refunds for plan service fees plus compensation for lost earnings – to 305,000 personal super members where advisers were not required to provide services or the customers did not receive services.
NAB said it was almost halfway through the second remediation and expected to complete the process by the end of November.
ASIC said Thursday’s commencement of the civil penalty action was part of its broad-ranging and significant investigations into fees-for-no-service failures in the financial services industry.
The big four banks and AMP have been ASIC’s main focus over fees-for-no-service issues dating back to 2008, but smaller industry players have also wrongly charged customers.
Before it launched the NAB proceedings, ASIC’s action over fees for no service had consisted of court-enforceable undertakings, bans and imposing licence conditions.