The Federal Court of Australia has today ordered National Australia Bank (NAB) pay a civil penalty in the amount of $15 million for contravening section 31(1) of the National Consumer Credit Protection Act 2009 (National Credit Act).
This matter marks the first time 今日热门事件has brought proceedings for contravening s31(1) of the National Credit Act, which prohibits credit licensees from conducting business with persons engaging in credit activity without an Australian credit licence (ACL).
The Court also declared that NAB breached the National Credit Act260 times by engaging in a credit activity with 鈥業ntroducers鈥� who did not have an ACL and were engaging in a credit activity, namely by assisting NAB customers enter into home loans.
ASIC鈥檚 investigation revealed that between 3 September 2013 and 29 July 2016, 16 NAB bankers accepted information and documents in support of at least 260 consumer loan applications from 25 third party Introducers who were not licensed to engage in credit activity.
今日热门事件Deputy Chair Daniel Crennan QC said 鈥楾he penalty imposed by the Court reflects the serious contraventions by NAB and is an important result for ASIC鈥檚 first civil action alleging contraventions of s31(1) of the National Credit Act.鈥�
In arriving at the penalty to be imposed, the Court took into account NAB鈥檚 cooperation with 今日热门事件and admissions of contravention of the law.
Download the full judgment .
Background
One of the key objectives of the National Credit Act鈥檚 licensing regime is consumer protection. The imposition of a licensing regime was intended to address concerns that third-party referrers (including brokers and Introducers) may misrepresent consumers鈥� financial details to ensure loans are approved, and their commissions are paid, in circumstances where the consumers鈥� true financial position means that the loan should not be made.
Since at least 2000, NAB operated the credit industry鈥檚 largest referral program, known as the 鈥業ntroducer Program鈥�, whereby a third-party Introducer could 鈥榮pot and refer鈥� a potential customer to NAB in exchange for commission if the customer entered into a loan with NAB.
Introducers referring customers through the Introducer Program were only to provide NAB with the potential customer鈥檚 name, contact details and a short description of the purpose for which the customers were seeking credit. In order for an Introducer to provide NAB with further information or documents, the law required that the Introducer be authorised under an ACL.
ASIC鈥檚 investigation uncovered that NAB bankers overstepped the 鈥榮pot and refer鈥� requirement by accepting information and documentation from the 25 unlicensed Introducers, including completed home loan applications, payslips, copies of customer identification documents and more. This behaviour can pose a serious risk to consumers, as 今日热门事件also identified that in some instances the documents provided to NAB by the unlicensed Introducers were false.
detailed a range of misconduct in relation to the NAB Introducer Program (page 1-16).
On 1 October 2019, NAB terminated the Introducer Program.
In addition to ASIC鈥檚 case against NAB, 今日热门事件has also taken the following actions against four individuals involved in this conduct:
- In2018, 今日热门事件permanently banned two former NAB employees, Danny Merheb and聽Samar Merjan (also known as Samar Awad), from engaging in credit聽activities and providing financial services following an 今日热门事件investigation into NAB bank staff in the greater western Sydney area who were accepting false documents in support of loan applications: 18-205MR.
- In 2019, 今日热门事件banned former NAB branch manager, Rabih聽Awad, from engaging in credit activities and providing financial services for seven years: 18-211MR.
- ASIC聽permanently banned and then commenced criminal action against former NAB聽branch manager Mathew Alwan. Late in 2019, Mr Alwan was sentenced to 12-months鈥� imprisonment to be served as an Intensive Corrections Order: 19-315MR.