- ASIC launched proceedings in the Federal Court against two entities in NAB’s wealth management division.
- The bank’s super funds are alleged to have wrongly charged up to $100 million for advice not given.
- ASIC is asking the court for a civil penalty.
The NAB now faces legal action over the fee-for-no-service scandal where it charged its super fund members for advice they didn’t get.
The bank is accused of failing to act in the best interests of members and is alleged to have wrongly charged up to $100 million for advice not given.
Corporate regulator ASIC today launched civil action in the Federal Court against two entities in NAB’s wealth management division, NULIS Nominees (Australia) Limited and MLC Nominees Pty Ltd.
The issue has been under investigation by the financial services royal commission.
NAB, in a submission to the commission, says it has made mistakes with fees charged to superannuation fund members for advice they didn’t get, and admits it is not perfect, but rejects suggestions it has committed a criminal offence.
These new court proceedings relate to fees charged to a significant number of superannuation members for services not provided.
ASIC alleges that members of MLC MasterKey Super products were misled.
MLC is alleged to have deducted about $33 million in service fees from 220,000 members of MLC MasterKey Business and MLC MasterKey Personal Super who did not have an adviser.
NAB is also said have also charged $67 million in service fees from 300,000 members of MLC MasterKey Personal Super when advisers were not required to provide services and members did not receive services.
ASIC is seeking declarations of contravention and a civil penalty from the Federal Court.
The regulator alleges that MLC Nominees and NULIS made “false or misleading representations” and contravened the Corporations Act and the Superannuation Industry (Supervision) Act by representing that it was entitled to deduct fees.
Between October 2016 and June 2017, NULIS remediated its members $35.9 million, including interest and less fund tax of $6 million.
NULIS also announced in July this year that it would refund Linked Members with the total remediation expected to be $87.1 million.
NAB’s Chief Legal and Commercial Counsel Sharon Cook says the bank is assessing the details of the case.
“We will consider carefully the allegations that have been made,” says Cook.
“We respect the work of our regulators and will work with ASIC on these matters.”
As confirmed by Ms Cook in July, NAB will be remediating these customers.
“We are almost half way through the process of refunding $67 million in Plan Service Fees, plus compensation for lost earnings,” she says.
“By the end of November we expect to be finished – closing the issue for the 305,000 members who were affected.
“We are acting to rebuild trust with our customers.
“Our announcement this week about removing grandfathered commissions from NAB Financial Planning and NAB Direct Advice, as well as accelerating repayments where fees have been wrongly charged, are more steps in this direction.”