Two of NAB's (ASX: NAB) wealth management division entities have been ordered to pay a combined $57.5 million penalty for fees for no service (FFNS) breaches, the largest penalty for a civil action brought by the corporate watchdog in history.
NULIS Nominees and MLC Nominees were found by the Federal Court of Australia to have made false and misleading representations to superannuation members about their entitlement to change plan service fees and members' obligations to pay the fees.
Further, the Court made declarations that both companies failed to ensure that their financial services were provided efficiently, honestly and fairly.
"The penalty imposed by the court reflects the very serious contraventions by MLC Nominees and NULIS and is the largest total penalty yet imposed in a civil action filed by ASIC," says Australian Securities and Investment Commission deputy chair Daniel Crennan.
"As the court observed, civil penalties must be sufficiently high to deter repetition by the contravener and others who might be tempted to contravene.
"Achieving specific and general deterrence by pursuing civil penalties through the courts is a key focus of the Office of Enforcement."
MLC Nominees will pay a total penalty of $49.5 million for its contraventions, while NULIS will pay a penalty of $8 million for its contraventions.
The Court found between 8 September 2012 and 30 June 2016, MLC Nominees misled members in the MasterKey Product and deducted approximately $33.6 million in Plan Service Fees from approximately 220,000 members who did not have a Plan Adviser.
Further, the Court found between 8 September 2012 and 30 September 2018, MLC Nominees and NULIS misled members and deducted approximately $71.9m Plan Service Fees from approximately 457,000 members.
In his decision, Justice Yates described NULIS and MLC Nominees' contraventions of the ASIC Act as "very serious".
In determining the amount of penalties to impose, Justice Yates considered the very large scale of the business within the MLC Wealth segment of the NAB Group in which NULIS and MLC Nominees operated.
"Fees for no service conduct is particularly egregious, having resulted in substantial financial loss for thousands of unsuspecting consumers," says Crennan.
"ASIC will continue to bring enforcement action against this misconduct and other case studies from the Financial Services Royal Commission.
"This demonstrates our resolve to deliver on the public's expectation that we hold wrongdoers of all dimensions to account."
Business News Australia