In Australian Securities and Investments Commission v National Australia Bank Limited (No 2) [2023] FCA 1118 the Federal Court of Australia ordered National Australia Bank Limited to pay to the Commonwealth of Australia a pecuniary penalty of $2,100,000 in respect of its unconscionable conduct declared to be in contravention of s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth). Background.

The Federal Court found that in the period from January 2017 until July 2018, NAB continued to charge its customers periodical payment fees in circumstances where it knew it had no contractual entitlement to charge those fees and omitted to inform its customers as to the wrongful charging or suggest that they review any such fees debited to their accounts.

NAB also charged certain customers a higher fee than agreed.

Over that period, NAB wrongfully charged periodical payment fees on 74,593 occasions to personal and business banking customers totalling $139,845.90.

NAB has remediated almost all of the customers affected by the conduct.

With respect to the amount of the penalty Justice Derrington observed:

“The central cause of the wrongful charging was NAB’s inability to manage its own computer systems and its unwillingness to apply sufficient resources to remedy the problem in a timely manner.

These reasons deal with the penalty … which has been assessed at $2.1 million. That is the maximum penalty that the legislation, as it existed at the time of the contravening conduct, permits the Court to impose in the circumstances of this case. Unfortunately, it is wholly inadequate when viewed against the nature of NAB’s conduct, especially its disregard of its customers’ rights over an extended period of time. In a context where NAB has been a repeat offender against the financial services legislation in this country and, as this case and others reveal, it appears to place a low priority on respecting the legal rights of its customers, a penalty several times the statutory maximum would have been far more appropriate.”

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