Remember when banks put people first? The courts just sent them a $15.5m reminder
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A major bank and its subsidiary have been hit with a multimillion-dollar penalty after failing to meet their legal obligations to vulnerable customers.
The breaches affected hundreds of Australians already grappling with life-changing events—from serious illness to domestic violence.
Now, the court’s decision has sparked a warning to the entire banking sector.
The Federal Court ordered National Australia Bank (NAB) and its subsidiary AFSH Nominees to pay a combined $15.5 million for failing to respond to 345 hardship applications within the mandated 21-day timeframe.
Justice Penelope Neskovcin said customers sought help for reasons including medical emergencies, bereavement, family violence, family breakdown, the pandemic, business failure, natural disasters and unemployment.
She noted the breached provisions of the National Credit Code were essential for protecting customers, and the high number of breaches showed the seriousness of the conduct.
The Australian Securities and Investments Commission (ASIC), which brought the case, said the penalty underscored the severity of failing to support customers in financial distress.
‘These failures likely made an already challenging time in people’s lives far worse,’ ASIC deputy chair Sarah Court said.
She added that the penalty sent an important message to other lenders that customers must remain at the centre of their business.
While no specific losses were suffered, the court inferred the failure to respond may have compounded customers’ financial difficulties and emotional distress.
The parties acknowledged that maximum penalties could have reached into the hundreds of millions, but Justice Neskovcin said those figures were ‘practically meaningless’ and accepted the agreed $15.5 million penalty.
NAB was ordered to pay $13 million, and AFSH Nominees $2.5 million, with both covering ASIC’s legal costs.
The breaches occurred between 2018 and 2023, with neither company’s senior management involved.
The total fine—0.22 per cent of NAB’s 2024 net profit—was deemed a substantial deterrent, and Justice Neskovcin said it should not be seen as an ‘acceptable cost of doing business’.
Both companies have since taken steps to prevent repeat breaches, and NAB apologised to those affected.
Sixty customers received an average of $540 each for financial and non-financial impacts caused by the delays.
ASIC had already warned in May last year that lenders were not doing enough to assist customers facing financial hardship.
Under the law, mortgageholders who cannot meet their repayments can notify their lender, which must respond or request more information within 21 days.
‘The hardship regime exists to help customers who are experiencing financial difficulty, often caused by significant life events such as serious illness, sudden unemployment and domestic violence,’ Court said.
If you’ve ever felt uncertain about where to turn during a financial crisis, knowing your options can make all the difference.
While the court ruling shows how banks can fail to meet their obligations, there are other pathways that can provide real support when it’s needed most.
One government agency offers little-known programs designed to help people navigate tough times and get back on track.
Read more: Centrelink unveils hidden support options for those in tough times
When banks fail to act on hardship pleas, what does that say about their commitment to the customers they serve?
The breaches affected hundreds of Australians already grappling with life-changing events—from serious illness to domestic violence.
Now, the court’s decision has sparked a warning to the entire banking sector.
The Federal Court ordered National Australia Bank (NAB) and its subsidiary AFSH Nominees to pay a combined $15.5 million for failing to respond to 345 hardship applications within the mandated 21-day timeframe.
Justice Penelope Neskovcin said customers sought help for reasons including medical emergencies, bereavement, family violence, family breakdown, the pandemic, business failure, natural disasters and unemployment.
She noted the breached provisions of the National Credit Code were essential for protecting customers, and the high number of breaches showed the seriousness of the conduct.
NAB fined $15.5m over hardship failures. Image source: International Accounting Bulletin
The Australian Securities and Investments Commission (ASIC), which brought the case, said the penalty underscored the severity of failing to support customers in financial distress.
‘These failures likely made an already challenging time in people’s lives far worse,’ ASIC deputy chair Sarah Court said.
She added that the penalty sent an important message to other lenders that customers must remain at the centre of their business.
While no specific losses were suffered, the court inferred the failure to respond may have compounded customers’ financial difficulties and emotional distress.
The parties acknowledged that maximum penalties could have reached into the hundreds of millions, but Justice Neskovcin said those figures were ‘practically meaningless’ and accepted the agreed $15.5 million penalty.
NAB was ordered to pay $13 million, and AFSH Nominees $2.5 million, with both covering ASIC’s legal costs.
The breaches occurred between 2018 and 2023, with neither company’s senior management involved.
The total fine—0.22 per cent of NAB’s 2024 net profit—was deemed a substantial deterrent, and Justice Neskovcin said it should not be seen as an ‘acceptable cost of doing business’.
Both companies have since taken steps to prevent repeat breaches, and NAB apologised to those affected.
Sixty customers received an average of $540 each for financial and non-financial impacts caused by the delays.
ASIC had already warned in May last year that lenders were not doing enough to assist customers facing financial hardship.
Under the law, mortgageholders who cannot meet their repayments can notify their lender, which must respond or request more information within 21 days.
‘The hardship regime exists to help customers who are experiencing financial difficulty, often caused by significant life events such as serious illness, sudden unemployment and domestic violence,’ Court said.
If you’ve ever felt uncertain about where to turn during a financial crisis, knowing your options can make all the difference.
While the court ruling shows how banks can fail to meet their obligations, there are other pathways that can provide real support when it’s needed most.
One government agency offers little-known programs designed to help people navigate tough times and get back on track.
Read more: Centrelink unveils hidden support options for those in tough times
When banks fail to act on hardship pleas, what does that say about their commitment to the customers they serve?
