National Bank could face millions of dollars in fines after charging hundreds of thousands of superannuation customers $100 million in fees for services they did not receive.
The corporate regulator has launched civil action against NAB alleging the bank’s superannuation trustees misled members about the fees.
It is the first court action launched by the n Securities and Investments Commission over the banking and wider financial industry charging fees for no service, compensation for which may end up exceeding $1 billion.
ASIC wants the Federal Court to impose a civil penalty and declare that NAB’s superannuation trustees NULIS and MLC Nominees broke financial services laws.
The case centres on the trustees deducting about $100 million in plan service fees from the account balances of hundreds of thousands of members of MLC MasterKey Super products.
ASIC took the legal action despite NAB compensating customers.
“Irrespective of the remediation, the conduct of the trustees did not promote confident and informed decision making by retail clients,” ASIC said in a court document filed on Thursday.
“Further, it promoted inefficiencies in the operation of ‘s regulated and taxpayer-supported superannuation arrangements, thereby exposing the wider n public to financial detriment as well as eroding consumer trust and confidence in the efficient administration of superannuation funds to the detriment of the wider industry.”
NAB chief legal and commercial counsel Sharon Cook said the bank will carefully consider the allegations.
“We respect the work of our regulators and will work with ASIC on these matters,” she said.
ASIC alleged NULIS and MLC Nominees, as NAB’s current and former superannuation trustee, misled members of MLC MasterKey Super products.
It alleged the trustees deducted $33.8 million in plan service fees from 220,000 MLC MasterKey business and personal super members who did not have a plan adviser.
ASIC said NAB also deducted $67.1 million in plan fees from 305,000 personal super members 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.
ASIC is seeking declarations of various breaches of the Corporations Act, which do not attract penalties, and the ASIC Act.
Under the ASIC Act, false and misleading conduct can attract a civil penalty between $1.1 million and $1.7 million per breach, depending on when it occurred.
ASIC has not specified what civil penalty it is seeking nor how many breaches it alleged, but has itemised about 50 separate declarations of contraventions, some of which involved hundreds of thousands of customers.
NAB paid about $35 million in remediation last year to the super members who did not have plan advisers.
NAB has dumped the plan service fee and is paying another $87 million – $67 million plus compensation for lost earnings – to the other 305,000 members.
The bank was grilled about the fees-for-no-service issue during the royal commission’s superannuation hearing last month.