National Australia Bank has been sued for allegedly failing to properly answer requests for hardship support from some of its most vulnerable customers over a near-five-year period.
A lawsuit filed by the financial regulator in the Federal Court claims the big-four bank and one of its subsidiaries did not respond to 345 hardship applications from customers within the 21-day period required by law.
The Australian Securities and Investments Commission revealed on Monday it was seeking the court to impose fines on NAB and subsidiary AFSH Nominees.
ASIC chair Joe Longo said the alleged failures could have compounded already challenging situations facing some customers.
"We allege NAB unlawfully failed to respond to their customers’ appeal for help when they needed them most," he said in a statement.
"These customers included people who were domestic violence victims, battling serious medical conditions, dealing with business closures or job loss.
"Amidst rising cost of living pressures, we have seen an increased number of customers reach out to their lenders for relief and we have seen first-hand the impact on lives and livelihoods when lenders fail to appropriately support customers experiencing financial hardship."
In a statement to the ASX, NAB acknowledged the court action while offering an apology to the affected customer from a period spanning from October 2018 until September 2023.
“We’re sorry that this happened when a number of our customers were in difficult situations and needed us to be there for them,” said NAB group executive for customer and corporate services Sharon Cook.
“We are focused on ensuring these customers receive the support they need," she said.
The bank would co-operate with the regulator and had been working on a revised approach to dealing with customers in financial difficulty, NAB said in its statement.
If a customer notifies a lender that they are unable to meet their credit obligations, lenders by law must consider making allowances to vary their contract and advise them of a decision within a specified timeframe.
Mr Longo said ensuring that companies complied with their financial hardship obligations was an enforcement priority for ASIC in 2024.
"We will not hesitate to take decisive action when banks and lenders fail to comply with their obligations," he said.
The commission is seeking declarations, pecuniary penalties and adverse publicity orders against NAB and AFSH.
It launched similar action against another major bank, Westpac, in 2023 for similar alleged breaches involving 229 customers.
That case is scheduled for hearing in May.
