National Australia Bank embroiled in legal battle: ASIC accuses bank of customer hardships mishandling

National Australia Bank Limited (NAB) has confirmed that the Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings against the bank and its subsidiary, AFSH Nominees Pty Ltd (Advantedge), for alleged breaches of the National Credit Code. The proceedings, filed in the Federal Court on 15 November, involve hardship notices submitted by 345 customers between October 2018 and September 2023.

The alleged contraventions highlight deficiencies in NAB’s response to customers facing financial hardship. The issue was voluntarily disclosed to ASIC by National Australia Bank Limited in October 2023, with NAB stating its commitment to addressing the concerns raised. Sharon Cook, NAB Group Executive for Customer & Corporate Services, expressed regret over the situation, acknowledging the bank’s failure to adequately support customers during challenging times.

Cook emphasised that National Australia Bank Limited is actively working to improve its practices, informed by findings from ASIC’s industry-wide report on hardship handling. The bank is also engaging with consumer advocacy groups to refine its approach to assisting customers in financial distress.

The proceedings are part of a broader effort by ASIC to enforce compliance with the National Credit Code, ensuring banks uphold their obligations toward vulnerable customers. National Australia Bank Limited has pledged to fully cooperate with the investigation while analysing the specific allegations detailed in ASIC’s case.

This development raises questions about the effectiveness of financial institutions in managing hardship claims, a critical area of accountability amidst rising economic pressures. The outcome of this legal process could set a precedent for handling hardship notices and broader consumer protection measures in Australia’s banking sector.