NAB fined $15.5m for failing to answer customers in financial hardship
National Australia Bank and a subsidiary have been fined more than $15m for failing to respond to hardship applications, with one executive conceding customers deserved better.
In a Federal Court decision released on Wednesday, NAB and AFSH Nominees were found to have left hardship applicants in the dark after failing to respond within 21 days.
The Australian Securities and Investments Commission (ASIC) brought the lawsuit.
In her decision, Justice Penny Neskovcin details that people who asked the bank for help were going through medical emergencies, family violence, the pandemic and business failure, natural disasters, and redundancy and unemployment.
'These failures likely made an already challenging time in people's lives far worse,' ASIC deputy chair Sarah Court said.
NAB failed to respond to hardship application from people going through family violence and natural disasters. Picture: NewsWire / Kelly Barnes
'This penalty sends an important message to other financial institutions – customers should be at the centre of what you do.'
Justice Neskovcin found NAB and AFSH made a 'high' number of breaches of the National Credit Code, in not providing written responses to 345 hardship notices between 2018 and 2023.
The hardship claims were knocked back by NAB staff incorrectly clicking a 'reject' button in their system. About 6 per cent of 12,600 hardship applications were incorrectly rejected this way.
NAB customer services boss Sharon Cook apologised and said 70 staff had been hired to address the issue.
'We're sorry we let down our customers when they needed our help,' she said.
'We have created NAB Care, a dedicated hardship assistance team, hired 70 new colleagues and increased the support options available to our customers.
'There is more to do, and we will continue to find ways to better support our customers who need us.'
NAB says it has hired 70 staff in a new dedicated hardship assistance unit. Picture: NewsWire / Glenn Campbell
Under the National Credit Code, if someone cannot pay their loan, lenders must consider varying the credit contract and advise them of the decision within specified time frames. Payment deferrals, reduced payment arrangements, interest-only periods, term extensions, capitalisation of arrears or interest-rate reductions are all options to get the loan repayments happening again.
As well as the $15.5m fine, NAB and AFSH have to publish notices about the breaches on their websites.
AFSH Nominees sells mortgages as Advantedge Financial Services.
From September 30, Advantedge will stop accepting new home loan applications. From next year, all Advantedge loans will be moved over to NAB.
In a letter sent to affected customers, NAB customer services executive Jocelyn Turner told them what the bank had fixed since the wave of hardship rejections.
'Our customers deserved better from us, particularly during their most challenging financial moments,' Ms Turner said.
'We have taken our response extremely seriously and have been working alongside ASIC to improve our approach.'
As well as the 70 new staff, more hardship options are available to people, and frontline NAB staff have completed training to recognise financial hardship indicators.
Executives from across the bank also now met to discuss particularly sensitive and complex hardship cases to provide 'personalised solutions', Ms Turner said.
'As a result of these actions, more customers are receiving hardship support through NAB,' she said.
'While this reflects the unfortunate reality that many Australians continue to face financial challenges, the increasing referral rate also means more customers are receiving help.
'Importantly, we are helping them in the early stages enabling them to recover more quickly.'
Originally published as 'Deserved better': NAB fined $15.5m for failing to answer customers in financial hardship
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