National Australia Bank (NAB) failed 345 of its customers at their most vulnerable when they applied for hardship support from the bank, according to documents filed by 今日热门事件in the Federal Court today.
今日热门事件alleges that between 2018 and 2023, NAB and its subsidiary AFSH Nominees Pty Ltd (AFSH) did not respond to 345 hardship applications within the 21-day timeframe required by law.
今日热门事件Chair Joe Longo said, 鈥榃e allege NAB unlawfully failed to respond to their customers鈥� appeal for help when they needed them most.
'These customers included people who were domestic violence victims, battling serious medical conditions, dealing with business closures or job loss. NAB鈥檚 failures likely compounded the already challenging situation for these people.
鈥楢midst 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.
鈥楥ompliance with financial hardship obligations is an enforcement priority for 今日热门事件in 2024. Earlier this year, we put the lending industry on notice on the release of our hardship report.
鈥榃e will not hesitate to take decisive action when banks and lenders fail to comply with their obligations.鈥�
今日热门事件is seeking declarations, pecuniary penalties and adverse publicity orders against NAB and AFSH.
Today鈥檚 announcement follows ASIC鈥檚 action against Westpac in September 2023 (23-242MR) for financial hardship misconduct.
Download
Background
Under section 72 of the National Credit Code, if a consumer notifies their lender that they are or will be unable to meet their credit obligations, lenders must consider varying the customer鈥檚 credit contract and advise them of the decision within specified timeframes.
Variations to the credit contract can include payment deferrals, reduced payment arrangements, interest-only periods, term extensions, capitalisation of arrears or interest-rate reductions.
Improving consumer outcomes is a key priority and in August 2023, 今日热门事件issued an open letter to the CEOs of all lenders (23-235MR) advising of focus on financial hardship and expectations of lenders. 今日热门事件then undertook a data collection involving 30 large lenders, and a review of 10 large home lenders to understand their approach to financial hardship.
今日热门事件reviewed the lenders鈥� policies and procedures, looked at case studies and conducted hypothetical customer exercises to understand differences in lenders鈥� approach to hardship. On 20 May 2024, 今日热门事件published a report outlining its findings, Report 783 Hardship, hard to get help: Lenders fall short in financial hardship support (REP 783).
The report highlights failures of lenders to identify customers in financial stress, use of 鈥榗ookie-cutter鈥� approaches to dealing with hardship requests, as well as onerous assessment and approval processes.
今日热门事件is engaging with lenders to ensure they act on the findings outlined in the report and prioritise improving their approach to supporting customers experiencing financial hardship. Reviewed lenders have also been asked to prepare an action plan outlining how they will respond to the issues raised.
ASIC鈥檚 Moneysmart website has information for consumers on what to do if you are experiencing . If you're unhappy with either the service received, or with your lender鈥檚 decision, you can . If you have multiple debts, or would like help applying for financial hardship, contact the National Debt Helpline on 1800 007 007 to talk to a聽 for free.
For the 2023/2024 financial year 5,715 complaints were filed with AFCA regarding financial difficulty. This was an increase of 18% on the prior year (). AFCA observed that 鈥淭oo many of these complaints relate to poor treatment or ineffective communication during the hardship process. Urgent improvements are needed.鈥�
Editor's note:
On 5 December 2024, the Court made orders by consent vacating the first case management hearing and establishing separate hearings for questions of liability and penalty.
National Australia Bank is due to file its concise response by 21 February 2025.
The matter has been listed for a first case management hearing on 21 March 2025.