Australia regulator sues NAB for breach of financial hardship laws

Australia’s corporate watchdog on Monday launched civil penalty proceedings against National Australia Bank, the country’s second-largest lender, for failing to respond to hundreds of financial hardship applications within the legally mandated time frame.

The Australian Securities and Investments Commission (ASIC) claims that NAB and its unit AFSH Nominees failed to meet the legal 21-day deadline for responding to 345 hardship applications over a five-year period from 2018 to 2023.

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’s credit contract and advise them of the decision within specified time frames.

“NAB and AFSH Nominees are now considering the detail of the proceedings brought by ASIC and will continue to cooperate fully with the regulator,” the Melbourne-headquartered lender said in a separate statement.

Among those affected by NAB’s delayed responses were individuals facing severe personal challenges, such as survivors of domestic abuse, those struggling with grave health issues, and people coping with unemployment or the closure of their businesses, ASIC said.

“Amidst 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,” ASIC Chair Joe Longo said.

Earlier this year, ASIC conducted a comprehensive review of financial hardship practices among major lenders, including data collection, policy analysis, and case studies, culminating in a May 2024 report that exposed significant shortcomings in lenders’ approaches to identifying and supporting customers facing financial difficulties.