ASIC alleges the conduct began in December 2013. The bank collected more than $650 million in ongoing service fees between 2009 and 2018. The regulator’s case concerns the accounts of 1400 customers.

Treasurer Josh Frydenberg said the action was a significant development and the legal process must now be allowed to run its course.

Court documents say NAB was aware from May 2013 that the charging of fees for no service was endemic and puts former chief customer officer Andrew Hagger firmly in the frame. Darrian Traynor

"Our financial sector is a vitally important part of our economy and the public rightly expect that our financial institutions uphold the law and behave in accordance with community expectations," Mr Frydenberg said.

Among the most serious charges against the bank are 1811 allegations of misleading and deceptive conduct with a maximum penalty of $2.2 million each or a total of $3.9 billion, and 1609 allegations of unconscionable conduct with a maximum penalty of $2.2 million each, or another $3.5 billion in total.

The penalty imposed on the bank is unlikely to be as high as the maximum, with bank sources pointing to recently settled cases in which financial penalties were far lower than the theoretical maximum.

Court documents state the bank was aware from May 2013 that the charging of fees for no service was endemic across the bank and its subsidiaries and puts NAB's former chief customer officer Andrew Hagger firmly in the frame.

The regulator asked the bank in June 2015 to review its operations and report any instances of fees for no service, according to documents lodged by the regulator.


NAB's internal audit team would not complete its review until almost one year later, in April 2016, which concluded the systems underpinning NAB Wealth and NAB Financial Planning were a mess.

The review would find “a lack of clarity about the responsibilities to ensure that ongoing fees were appropriately charged to clients, a lack of controls to ensure that ongoing fees were established, maintained and terminated appropriately, and a lack of monitoring over the ongoing fees charged".

Defects in disclosure obligations

A follow-up review in September 2016 found defects in disclosure obligations and "the risk of prohibited charging."

One year later, in June 2017, the bank discovered it had no digital records of services being provided to clients who were charged $54 million. A cohort of that group which had been charged $28 million had no digital records of having ever being given advice.

In March 2018, Mr Hagger was provided with memo that asked him to accept the risk the bank was not providing services it was charging for and was issuing defective product disclosure statements, the regulator says.

"NAB categorised the severity of the risk as ‘critical’ and its likelihood as being ‘almost certain’ within 12 months and therefore designated the risk as being ‘excessive’ within NAB’s policies," the document says.


Two months later Mr Hagger would be given another memo which was again seeking his approval for excessive risk.

"The memorandum stated that the control environment for compliance obligations within NAB Advice was ‘largely ineffective’, including with respect to FFNS Conduct and No FDS Conduct, and was not expected to be brought back within appetite until 30 September 2019," the document says.

"Since at least 31 May 2018, NAB knew that its systems and controls did not provide adequate assurance that they would detect and prevent FFNS Conduct, No Fee Disclosure Statement Conduct and Prohibited Charging."

A serious matter, says NAB

NAB’s chief legal and commercial counsel Sharon Cook said the bank was taking the matter seriously. She said the bank had already repaid $37.8 million to 27,500 customers after starting the process in December last year.

“From February 2019 NAB FP began switching off fees for all clients with ongoing fee arrangements,” Ms Cook.

Ms Cook said the business moved customers onto new and compliant contracts from April 1, 2019, and immediately stopped any new ongoing fee arrangements.

“NAB Financial Planning has made changes to systems and controls and will continue to improve so we can service our clients better,” Ms Cook said.


The dysfunctional relationship between the bank and the regulator was laid bare during the Hayne royal commission in a document titled 'Outline of suspected offending by NAB Group' the company tried to keep secret.

The document detailed failures at the bank going back to 2003 and how the bank was attempting to frame the mere offer of services such as a website or a telephone number as a reasonable basis for charging customers.

The court action is the latest in a series of referrals from the year-long Hayne royal commission which has recently been ramped up from solely civil actions to include a criminal action against Commonwealth Bank for the hawking of insurance policies.

ASIC is already suing NAB’s superannuation arm NULIS over its fees-for-no-service conduct. The regulator alleges the bank charged retirement savers $100 million in fees it was not entitled to and has alleged at least 50 communications with members were in breach of the ASIC Act.