National Australia Bank Ltd (NAB)
(NAB1) 14 September 2020
The Federal Court of Australia ordered two entities in NAB’s wealth management division to pay a total $57.5 million penalty after the Court found that NULIS Nominees (Australia) Limited (NULIS) and MLC Nominees Pty Ltd (MLC Nominees) made false and misleading representations to superannuation members about their entitlement to charge plan service fees and members’ obligations to pay the fees.
The Court also made declarations that MLC Nominees and NULIS failed to ensure that their financial services were provided efficiently, honestly and fairly.
MLC Nominees will pay a total penalty of $49.5 million for its contraventions, while NULIS will pay a penalty of $8 million for its contraventions.
Between 8 September 2012 and 30 June 2016, MLC Nominees misled members in the MasterKey Product and deducted approximately $33.6 million in Plan Service Fees from approximately 220,000 members of MasterKey Business Super (MKBS) and MasterKey Personal Super (MKPS), divisions of the MasterKey Product, who did not have a Plan Adviser.
Between 8 September 2012 and 30 September 2018, MLC Nominees and NULIS misled members and deducted approximately $71.9m Plan Service Fees from approximately 457,000 members of MasterKey Personal Super linked to Plan Advisers where Plan Advisers were not required to provide services and members did not receive services or any services they could not otherwise obtain for free.
The Federal Court made declarations to the effect that NULIS and MLC Nominees breached the ASIC Act for misleading and deceptive conduct and by making false or misleading representations, for which the civil penalties have been ordered.
The Court also made declarations that NULIS and MLC Nominees breached the Corporations Act by failing to ensure that the financial services were provided efficiently, honestly and fairly, whereby Yates J said the contravening conduct was represented by MLC Nominees’ and NULIS’ failure to inform members that, when they transferred from MKBS to MKPS, they could “turn off” their plan service fee; its failure to exercise its own right, as trustee, to terminate the plan service fee of members who had transferred from MKBS to MKPS; and the fact that it made or authorised the making of monthly deductions from the accounts.
Other declarations related to failing to comply with the financial services laws, for misleading and deceptive conduct and for issuing a defective Product Disclosure Statement.
$57.5 million penalty ordered by the Court.
(NAB1) 20200914 [ASIC Media Release – NAB Wealth Funds (Misleading & Deceptive Conduct $57.5m penalties)]
(NAB1) ASIC v MLC Nominees Pty Ltd  FCA 1306 (NAB Misleading & Deceptive Conduct)
(NAB2) 26 August 2021
The Federal Court ordered NAB to pay an $18.5 million penalty for failures relating to misleading fee disclosure statements.
The Court also declared NAB contravened its obligations as an Australian financial services licence holder to act efficiently, honestly and fairly by failing to have procedures and systems in place to provide timely and effective fee disclosure statements.
The Court found NAB breached the law on numerous occasions when it:
- Charged fees for personal advice without giving customers compliant fee disclosure statements.
- Failed to provide fee disclosure statements to clients within the time required.
- Made false or misleading representations to clients in fee disclosure statements about the amount clients had paid for services and the services which clients had received.
- Had not established or maintained systems and procedures to identify whether: services were provided in accordance with client service agreements; its fee disclosure statements were compliant; and it was prohibited from charging service fees.
$18.5 penalty ordered by the Court.
(NAB3) 19 October 2020
The Federal Court of Australia ordered NAB pay a civil penalty in the amount of $15 million for contravening section 31(1) of the National Consumer Credit Protection Act 2009 (National Credit Act).
This matter marks the first time ASIC has brought proceedings for contravening s31(1) of the National Credit Act, which prohibits credit licensees from conducting business with persons engaging in credit activity without an Australian credit licence (ACL).
The Court also declared that NAB breached the National Credit Act 260 times by engaging in a credit activity with ‘Introducers’ who did not have an ACL and were engaging in a credit activity, namely by assisting NAB customers enter into home loans.
ASIC’s investigation revealed that between 3 September 2013 and 29 July 2016, 16 NAB bankers accepted information and documents in support of at least 260 consumer loan applications from 25 third party Introducers who were not licensed to engage in credit activity.
This conduct was the subject of the Financial Services Royal Commission (Final Report 1 February 2019).
$15 million penalty ordered by the Court.