On Monday, Australia’s corporate watchdog initiated civil penalty proceedings against National Australia Bank (NAB), the nation’s second-largest lender. The action comes after NAB failed to respond to hundreds of financial hardship applications within the legally required time frame.
As a result of the announcement, NAB’s shares dropped as much as 1.9%, reaching A$38.98 in early trading. This decline aligns with a 1.2% decrease in the broader financial sub-index.
The Australian Securities and Investments Commission (ASIC) asserts that NAB and its subsidiary, AFSH Nominees, did not meet the legal 21-day deadline for responding to 345 hardship applications over a five-year period from 2018 to 2023.
ASIC highlighted that individuals who experienced delays were facing significant personal challenges. These included survivors of domestic abuse, individuals with serious health issues, and those dealing with unemployment or the shutdown of their businesses.
ASIC Chair Joe Longo stated that NAB’s failures likely made the situation more difficult for these individuals.
According to Section 72 of Australia’s National Credit Code, a person with overdue payments can request a change to their credit contract terms due to financial hardship. Creditors must respond in writing within 21 days after receiving the request.
The Melbourne-headquartered lender, NAB, mentioned in a separate statement that they and AFSH Nominees are currently examining the details of the proceedings initiated by ASIC. They will continue to fully cooperate with the regulator.
ASIC completed a comprehensive review of major lenders’ financial hardship practices in May 2024. The review revealed significant failures in identifying and supporting customers who are struggling.
Longo stated, “We will not hesitate to take decisive action when banks and lenders fail to comply with their obligations.”
The corporate regulator is seeking declarations, pecuniary penalties, and adverse publicity orders against NAB and AFSH, according to their announcement.
Last year, ASIC took legal action against Westpac Banking Corp, which is another major lender in Australia. The regulator accused the bank of misconduct related to its handling of financial hardship cases.
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