ASIC takes NAB to court

  • By Kate Weber

ASIC announced on Friday that it will sue National Australia Bank for dealing with unlicensed home loan introducers, claiming the bank failed to act in an honest and fair manner. 

In what the regulator described as a "Royal Commission case study," ASIC is asking the Court to find that NAB breached the National Credit Act and to impose a civil penalty on NAB for doing so. 

NAB now faces the maximum penalty for one breach of the National Credit Act, during the time of violations, was 10,000 penalty units or to $1.7 to $1.8 million. 

During the Royal Commission the introducer program was heavenly criticized by commissioner Haynes when it was revealed 16 bankers accepted loan information and documentation from 25 unlicensed introducers in relation to 297 loans.

ASIC alleges that between September 2013 and July 2016, NAB received information and documents in support of consumer loan applications from third party introducers who were not able to participate in credit activity. 

Under the program, a third-party introducer could ‘spot and refer’ a potential customer to NAB in exchange for commission if the customer entered a loan with NAB. 

Between 2013 to 2016 NAB’s Introducer Program generated $24 billion dollars’ worth of loans, after its inception in 2000.

ASIC’s investigation uncovered that NAB bankers overstepped the ‘spot and refer’ requirement through false information from the 25 unlicensed introducers, including completed home loan applications, payslips, copies of customer identification documents and more. 

ASIC stated this behaviour poses a serious risk to consumers, as ASIC also identified that in some instances the documents provided to NAB by the unlicensed introducers were false.

In March of this year, NAB announced it was ending its introducer program while proceedings will be listed for directions on a date to be determined by the Court.