NAB fined $15.5 million after failing to respond to hundreds of struggling Aussies: 'Far worse'

Yahoo

10 hours ago

NAB and its subsidiary AFSH Nominees Pty Ltd have been ordered to cough up $15.5 million following a Federal Court case. The Big Four bank was fined after an investigation found it had failed to respond to hundreds of struggling customers.
Between 2018 and 2023, NAB and AFSH didn't get back to 345 hardship applications within the required 21-day timeframe. These customers were left in the dark for more than three weeks and didn't know if they would be given leniency.
"These failures likely made an already challenging time in people's lives far worse," Australian Securities and Investments Commission (ASIC) Deputy Chair Sarah Court said.
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ASIC brought the case against the bank to the Federal Court and said other lenders should remind themselves of their legal obligations to their customers.
"This decision highlights the seriousness of the failures of NAB and AFSH to support their customers experiencing financial hardship," Court added.
"This penalty sends an important message to other financial institutions – customers should be at the centre of what you do.
"ASIC will not hesitate to take action when banks and lenders fail to comply with their obligations."
A damning ASIC report released last year found lenders were making it difficult for customers to get help, with more than a third of people seeking assistance dropping out of the process.
The review found banks should be doing more to support Aussies struggling with repayments, with 40 per cent of customers who received hardship assistance - through reduction or referral of payments - falling into arrears right after the assistance period ended.NAB customers left in the dark during their hour of need
Justice Penelope Neskovcin revealed during the hearing some of the circumstances that customers were in when they applied for hardship over those six years.
They included family violence, issues related to the pandemic, natural disasters, medical issues or emergencies, bereavement, and losing their jobs or their businesses failing.
She said the National Credit Code, which stipulates the 21-day response timeframe, is an "important formal mechanism" that's designed to protect customers who are struggling to keep up with their payments.
None of the 345 customers who didn't hear back from NAB and AFSH in the required time period suffered any losses.
But the court heard their situations could have been helped "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".
NAB was ordered to pay $13 million, while AFSH Nominees will have to pay $2.5 million, as well as ASIC's court costs.
The bank said it had taken measures to ensure this wouldn't happen again, and 60 customers were paid an average of $540 to cover the impact of the breaches.
Aussies in hardship as interest rates fall
The Reserve Bank of Australia (RBA) recently cut interest rates for the third time this year, which will provide much-needed relief to homeowners being pushed to the brink by their mortgage payments.
The National Debt Helpline (NDH) revealed more than 168,000 people reached out for help in the 2024-25 financial year, highlighting how timely these moves from the central bank have been.
Interest rates were at an all-time low during the pandemic, and many jumped into the property market to capitalise on that trend.
But as inflation spiked, so too did the cash rate, with the RBA hiking it 13 times between May 2022 to November 2023.
It was held at 4.35 per cent until February this year, when the first rate cut since 2020 was authorised.
NDH coordinator Vicki Staff said the number of calls in 2024-25 to their helpline was the biggest since 2018-19, and showed just how hard the last year had been.
'Many of life's essentials are just more expensive than they used to be," she said.
'These people are very distressed and worried about their financial future and families.'
Those who are still struggling can call the National Debt Helpline on 1800 007 007 or they can jump online and chat with a financial counsellor at ndh.org.au.