The National Australia Bank Ltd (ASX: NAB) share price is under pressure after ASIC sued the ASX bank share.
ASIC commences legal action against NAB
NAB has been accused by ASIC of failing 345 customers “at their most vulnerable when they applied for hardship support” from the bank, according to ASIC.
Australian Securities and Investments Commission alleges that between 2018 and 2023, NAB and its subsidiary AFSH Nominees did not respond to 345 hardship applications within the 21-day timeframe that is required by the law.
The ASIC Chair Joe Longo said:
We allege NAB unlawfully failed to respond to their customers’ 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’s failures likely compounded the already challenging situation for these people.
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.
Compliance with financial hardship obligations is an enforcement priority for ASIC in 2024. Earlier this year, we put the lending industry on notice on the release of our hardship report.
We will not hesitate to take decisive action when banks and lenders fail to comply with their obligations.
Bank’s response
In an ASX announcement, NAB acknowledged the civil penalty proceedings that have been started against it in the Federal Court.
The NAB group executive for customer and corporate services, Sharon Cook, said NAB had disclosed the issue to ASIC in October 2023. Ms Cook said:
We’re sorry that this happened when a number of our customers were in difficult situations and needed us to be there for them.
We are focused on ensuring these customers receive the support they need.
Following ASIC’s approach into hardship practices across the industry, we have also been working on a new approach to supporting customers in financial difficulty. This includes consulting with consumer advocates.
NAB is now considering the detail of the proceedings brought by ASIC and will “continue to cooperate fully with the regulator”.
Final thoughts on the NAB share price
Ever since the Royal Commission into financial services, banks have been under higher scrutiny. This isn’t a good look for NAB and it remains to be seen how costly it is.
After the strong run-up of share prices over the past year, I wouldn’t call any of the major banks, including NAB shares, a good value buy. There are plenty of other ASX dividend shares I’d rather buy first.
