How Will The NAB Share Price React To A Potential $10 Billion Fine?


Companies and indices mentioned:


NAB (ASX: NAB) faces a potential fine of up to $10 billion, how will the share price react?

NAB is one of the four largest financial institutions in Australia in terms of market capitalisation, earnings and customers. However, in 2018, it was Australia’s largest lender to businesses and has operations in wealth management and residential lending. It also operates the online-only Ubank.

Who Is Fining NAB?

Australian Securities and Investments Commission (ASIC) announced yesterday it is alleging that the bank has broken the law more than 10,000 times, which means it could face a maximum  possible penalty of up to $10 billion.

Two of the main issues that ASIC is launching legal proceedings about is that NAB was charging fees for no service and that NAB issued false/misleading fee disclosure statements (FDS) that didn’t reflect the services given & fees paid by customers.

Between 2009 and 2018 NAB received over $650 million in ongoing service fees and NAB has stated it has provisioned more than $2 billion for customer related remediation across all of its advice licensees.

However, it is also ASIC’s case that NAB engaged in unconscionable conduct from at least May 2018 by continuing to charge ongoing service fees to certain customers, but didn’t stop charging fees until 4 February 2019.

There is a maximum fine of $250,000 per contravention of the law for charging fees for no service and for failing to provide a timely FDS. There is also a maximum fine of $1.7 million to $2.1 million per contravention for unconscionable conduct and for false or misleading representations.

ASIC Deputy Chair Daniel Crennan QC said: “Fees for No Service misconduct has been widespread and is subject to ongoing ASIC regulatory responses including investigations and enforcement actions. This widespread misconduct was examined in some detail by the Financial Services Royal Commission. ASIC views these instances of misconduct as systematic failures, unfair to customers including those that are more vulnerable. 

When the Fees for No Service misconduct is coupled with Fees Disclosure Statements inadequacies or failings, customers are potentially placed in a more disadvantageous position. The customer may not therefore have been provided with the opportunity to know whether they have received the services for which they have paid or the amount of fees charged to them.”

It’s tough timing for NAB because the annual general meeting (AGM) is today, so it could be a little feisty like the Westpac (ASX: WBC) AGM was.

3 stocks to own in July 2020...

Amidst the COVID-19 confusion, there are some companies still growing FAST (think: online meetings through Zoom, streaming companies like Netflix and eHealth services provided by Teledoc).

While the world grapples with COVID-19, some companies are still growing rapidly. The entire cloud computing market is valued around $US210 billion but if you ask me, it seems clear as day that this market is only going to get bigger in 2020 and beyond.

That's why our top investment analyst has just identified 3 growth stocks in a net cash position, with strong competitive forces... and obvious tailwinds at their back. He owns all three of them right now!

Claim a FREE investing report on our analyst's "3 best share ideas for the cloud revolution" when you create a free Rask Australia account.

Our report is 100% free and unlocks hundreds of hours of bonus content.

Simply click here to access the report.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.