The Federal Court has mandated that National Australia Bank (NAB) and its subsidiary, AFSH Nominees (AFSH), pay a total of A$15.5m ($10.1m) in penalties for their inadequate response to customers experiencing financial difficulties.
In May 2024, the Australian Securities and Investments Commission (ASIC) highlighted concerns within the lending sector through the release of a hardship report, indicating that lenders were not adequately supporting customers facing financial challenges.
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The institutions have also consented to cover the costs incurred by the ASIC.
The Court’s findings revealed that from 2018 to 2023, NAB and AFSH failed to address 345 hardship applications within the legally required 21-day period.
Consequently, these customers were left uninformed about the status of their applications for assistance.
NAB and AFSH acknowledged their failure to respond to the 345 hardship applications within the stipulated timeframe, admitting that they did not take action until after ASIC initiated legal proceedings.
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By GlobalDataThis oversight was attributed to staff incorrectly using a “reject” button in their system, resulting in a lack of communication with customers regarding their hardship applications.
In addition to the financial penalty, NAB and AFSH must publish an adverse publicity notice on their websites and distribute a copy of this notice to each affected customer.
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 August 2023, ASIC sent an open letter to the CEOs of all lenders, outlining its emphasis on financial hardship and its expectations for lenders.
Following this, ASIC gathered data from 30 major lenders and assessed 10 large home lenders to evaluate their handling of financial hardship cases.
The review included an analysis of lenders’ policies and procedures, case studies, and hypothetical customer scenarios to identify variances in their approaches to hardship.
