ASIC alleged NAB failed to issue or issued defective fee disclosure statements in December 2019.
The long-running case was resolved with the Federal Court confirming the size of the fine would be $18.5 million.
The judgement shows that ASIC alleged the fine should have been in the region of $40 million, however, NAB argued that this would have been unfair.
The Federal Court agreed in its judgement, stating a fine of $40 million would have been excessive.
In the judgement, NAB had argued that the continuation of charges after May 2018 should not be considered as a significant aggravating factor.
The bank claimed that from this time they were investigating the scale of the non-compliance, as well as taking steps to improve compliance measures.
The judgement concluded that NAB still ran risks of contravention despite this, as the bank continued to charge clients ongoing fees after May 2018.
However, it did not accept that this was precedent for issuing NAB with a higher penalty.
The judgement also rejected NAB’s classification that the misconduct falls at the less serious end of the spectrum.
ASIC has stated that they hope the penalty against NAB will encourage other licensees to ensure they provide a level of service that inspires client confidence in the industry.
“The penalty of $18.5 million handed down to NAB is a timely reminder to financial services licensees to ensure they meet their obligations to their clients,” said ASIC deputy chair Sarah Court.
In accepting the fine, NAB has reinforced its message that it has gone to reasonable lengths to make amends to clients affected by the misconduct.
“To address this issue, NAB stopped charging ongoing service fees to customers of its former NAB Financial Planning business in 2019,” NAB group executive, legal and commercial services, Sharon Cook said.
“In 2020, we established a remediation program which has to date paid approximately $31m to more than 15,000 customers in order to make things right.”
So an insto like NAB don’t issue FDSes (or if they do, defective ones) to thousands of clients and they get a small (when taking into account their size) financial slap on the wrist but can keep operating. Meanwhile from what I’ve heard an Adviser does the same under instructions from their Dealer Group and they’re banned from the industry. How in God’s name does this look fair to anyone in the public, media or government? It looks to me like a payoff system for those at the big end of town to get out of trouble.
I wonder if Westpac and the FPA will “do a deal” where Westpac will say we had a process in place it was really individual planners that just failed to deliver on services….what’s needed is ethical planners with higher education standards….and to rectify we’ll be making membership of one of the bodies compulsory. in turn the FPA will say yep a Bachelor of Financial Planning for all.
Small slap on the wrist really
ASIC considers advice a Record of Advice saying sell BHP and buy RIO….whilst “service” and “advice” is much more….ASIC current approach is if the apostrophe is in the wrong place it’s “defective”. Spelling mistake…defective….grammatical mistake….defective…..three phone calls promised but two delivered…defective…The Difference is ASIC wants to drive out IFA’s, but we actually delivered “services”.