National Australia Bank Ltd (ASX: NAB) faces legal action from the Australian Securities and Investments Commission (ASIC) for its role in the ‘fees for no service’ issue that was exposed in the Royal Commission.
Amongst other things, it appears the Royal Commission has affected the NAB share price as well as those of the other major banks.
What Exactly Is Going On?
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NAB was allegedly charging fees to clients despite not providing a specific service, although NAB is arguing it provided other benefits that compensated for the fee.
The two NAB businesses facing legal action are part of its wealth management segments: NULIS Nominees and MLC Nominees.
ASIC alleged in a media statement that NAB had incorrectly charged fees to many thousands of clients, totalling approximately $100 million.
According to the AFR, ASIC has estimated that the whole debacle could cost more than $1 billion after everything is said and done.
“ASIC also alleges NULIS and MLC Nominees deducted approximately $33m Plan Service Fees from 220,000 members of MLC MasterKey Business and MLC MasterKey Personal Super who did not have Plan Adviser,” ASIC’s statement read.
“NAB also deducted approximately $67m Plan Service Fees from 300,000 members of MLC MasterKey Personal Super where Plan Advisers were not required to provide services and members did not receive services (or any services they could not otherwise obtain for free).”
NAB Keeps Rates On Hold
In a bid to win some customer support and score political brownie points, NAB has decided not to increase interest rates.
Last week, we wrote how Commonwealth Bank of Australia (ASX: CBA) had increased interest rates on its mortgages, along with Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC).
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