The Australian Securities and Investments Commission (ASIC) has filed legal action against National Australia Bank (NAB) and its subsidiary, Advantedge Financial Services, alleging failures in addressing financial hardship claims from 345 customers within the legally required timeframe.
Failure to respond
The corporate regulator claims that between 2018 and 2023, NAB and Advantedge failed to respond to hardship requests within 21 days, as mandated under the National Credit Code.
These applications came from customers facing a range of life-circumstance challenges including domestic violence, serious health issues, job losses and business closures.
The case was lodged in the Federal Court and was brought to hold the bank accountable for breaching its obligations.
ASIC chair Joe Longo emphasised the impact of NAB’s alleged failures, saying that these delays likely exacerbated the challenges faced by already vulnerable customers.
In a statement to the Australian Securities Exchange (ASX), NAB acknowledged the proceedings and disclosed that it had reported the issue to ASIC in October 2023.
The bank expressed regret for the situation and pointed to its efforts to enhance its approach to handling financial hardship cases, including engagement with consumer advocacy groups.
The National Credit Code requires banks to respond to hardship applications promptly.
This includes offering options such as payment deferrals, reduced payments, extended loan terms or interest-only arrangements.
Credit providers must inform customers of their decision within 21 days if sufficient information is available or request additional details within the same period.
Rising cost of living
The lawsuit comes at a time of rising interest rates and cost-of-living pressures, where financial institutions are urging customers to seek assistance early if they anticipate challenges meeting loan obligations.
ASIC’s action against NAB follows a similar case in September 2023, where the regulator sued Westpac for failing to respond to more than 200 hardship claims due to technical issues.
The Federal Court will determine the penalties NAB may face, reinforcing the legal and moral responsibility of banks to support customers in financial distress.