The Federal Court has ordered National Australia Bank and its subsidiary AFSH Nominees to pay $15.5 million. The penalty relates to failures to respond to customers seeking hardship help.
The Court found NAB and AFSH did not respond to 345 hardship applications within 21 days. The breaches occurred between 2018 and 2023. Customers were left unaware of the outcomes of their requests.
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.’
Justice Neskovcin said the breached provisions of the National Credit Code provide ‘…an important formal mechanism to protect consumers who may be experiencing hardship…’. Her Honour said 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’.
Her Honour also 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 must publish an adverse publicity notice on their websites. They must also provide the notice to each affected customer. The companies have agreed to pay ASIC’s costs.
Under section 72 of the National Credit Code, lenders must consider varying a customer’s credit contract after a hardship notice. They must tell the customer of their decision within set timeframes. Variations can include payment deferrals, reduced repayments, interest-only periods, term extensions, capitalising arrears, or cutting interest rates.
NAB and AFSH admitted they failed to respond to 345 customers in time. They did not respond to those customers until after ASIC began the case. The failure arose from staff incorrectly using a “reject” button in NAB’s system. That meant customers received no communication in response to their hardship applications.
ASIC warned lenders in May 2024 that hardship support was falling short. Its report found lenders were not doing enough for customers in difficulty.
‘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.
