ISCOVER
The major faces $15.5 million in fines after it and its subsidiary Advantedge were found to have failed 345 customers “at their most vulnerable”.
National Australia Bank (NAB) and its subsidiary AFSH Nominees Pty Ltd (AFSH) – known as Advantedge – have been fined $15.5 million for failing to respond to customers facing hardship.
The Federal Court issued the pecuniary penalty after the Australian Securities and Investments Commission (ASIC) found that the companies failed to respond to 345 hardship applications within the 21-day time frame required by law between November 2018 and October 2023.
As a result, those consumers remained unaware of the outcome of their hardship applications.
In November, the corporate regulator detailed how the major lender had “failed 345 of its customers at their most vulnerable”.
NAB and Advantedge 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.
Both have agreed to pay ASIC’s costs.
Acknowledging the penalty, NAB group executive, customer and corporate services, Sharon Cook, said: “We’re sorry we let down our customers when they needed our help.
“To address this, we have been working alongside ASIC and consumer advocates from across the industry to make the changes necessary to make sure all customers in hardship are getting the help they deserve.”
Cook added that in response to failings, the major had created NAB Care, a dedicated hardship assistance team, hired 70 new employees, and increased support options available to customers.
In a letter to consumer advocates sent yesterday, NAB executive for customer services, Jocelyn Turner, said: ”We have taken our response extremely seriously and have been working alongside ASIC to improve our approach to helping customers experiencing financial difficulty.”
The letter stated that NAB had rolled out training for frontline staff to better recognise financial hardship indicators and support customers.
Commenting on the penalty, 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 Penelope 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”.
Neskovcin added that impacts to customers could have been avoided if NAB had provided the affected customers with the required notices within the prescribed time frames.
The judge said the number of admitted contraventions of 72 was high, indicating the “significant scope – and thereby the seriousness – of the contravening conduct”.
Under section 72 of the National Credit Code, if a consumer notifies a lender they are – or will be – unable to meet obligations, their lender must consider varying the credit contract and advise them of the decision within specific time frames. Typical variations included payment deferrals, reduced payment arrangements, and interest-only periods.
In June, The Adviser broke the news that NAB will pull the Advantedge brand from the market over the next 12–18 months.
Banks under ASIC spotlight
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,” Court said.
“ASIC will not hesitate to take action when banks and lenders fail to comply with their obligations.”
NAB isn’t the first major lender to fall under the regulator’s spotlight for issues related to financial hardship.
In May, ASIC sued non-bank lender Resimac for allegedly failing to “provide appropriate care” when responding to hardship applications from home loan customers between 1 January 2022 and 15 February 2024.
That followed the decision by ASIC in September 2023 to commence civil proceedings against Westpac for allegedly failing to process 229 hardship applications
The latest allegations come after the Australian Financial Complaints Authority (AFCA) released its annual review for the financial year ending June 2024, in which the body said the rise in complaints related to financial hardship was a “significant issue of concern”.
“Complaints in this area were up 18 per cent over the past year, with a substantial portion relating to home loans,” AFCA’s report said.
“Many complaints were about failures by lenders to properly respond to, or adequately address, hardship requests. This was more pronounced among smaller lenders and buy now, pay later (BNPL) providers, though there were also issues among larger lenders where, for instance, automated processes can fail to account for individual circumstances.”
[Related: ASIC sues major lender]
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