National Australia Bank (NAB) has been sued by the corporate regulator for failures in dealing with customers experiencing financial hardship.

ASIC has alleged that NAB did not respond to 345 hardship applications within the 21-day timeframe legally required.

“We allege NAB unlawfully failed to respond to their customers’ appeal for help when they needed them most,” ASIC chair Joe Longo said.

“NAB’s failures likely compounded the already challenging situation for these people.”

The failures occurred between 2018 and 2023, according to ASIC’s Federal Court filing, and involve NAB and its subsidiary home loan group, Advantedge Financial Services.

In a statement to the stock exchange, NAB acknowledged the legal action and said it disclosed the issue to ASIC in October 2023.

“We’re sorry that this happened when a number of our customers were in difficult situations and needed us to be there for them,” NAB executive Sharon Cook said.

“We are focused on ensuring these customers receive the support they need.”

The bank said it has since worked on a new approach for dealing with hardship, including consulting with consumer advocates.

“When Australians are in financial difficulty, their bank should treat a request for support fairly and promptly,” said Peter Gartlan, the co-CEO of Financial Counselling Australia.

“We know how tough it is to survive in the current climate. Banks have a legal and moral responsibility to respond.”

Banks, lenders must respond to customers who run into trouble

Against the backdrop of rising interest rates and the cost-of-living crunch, banks and financial counsellors have advised customers to reach out early if they think they will fall behind on loan repayments.

Under the National Credit Code, if a customer notifies a lender that they are, or will be, unable to meet their obligations under a credit contract, the lender must consider varying their contract and advise them of the outcome within a certain timeframe.

Changes that could be made to loan agreements include deferring or reducing payments, extending the term of a loan or switching to interest-only payments for a period.

If the credit provider has enough information to make a decision, they must notify the customer 21 days after they received the hardship notice.

If they don’t have enough information, they need to request it during the same time period.

In September last year, ASIC sued Westpac, alleging it failed to respond to more than 200 customers seeking financial hardship assistance within the right timeframe, due to issues within its online processes.

Have you had issues getting help from your bank? Let us know.

Loading…