The suit alleged the bank did not respond to 345 hardship applications within the required timeframe
The Australian Securities and Investments Commission (ASIC) has initiated legal action against National Australia Bank (NAB) and its subsidiary, AFSH Nominees Pty Ltd (AFSH), for failing to comply with financial hardship obligations under Australian law.
The lawsuit, filed in the Federal Court, alleged that NAB did not respond to 345 hardship applications within the legally required 21-day timeframe between 2018 and 2023.
ASIC contended that NAB's lapses affected customers experiencing severe challenges, including domestic violence, serious medical issues, job losses, and business closures. According to ASIC chair Joe Longo, these failures may have exacerbated the difficulties faced by these individuals during critical moments.
"We allege NAB unlawfully failed to respond to their customers’ appeal for help when they needed them most," Longo said in a statement. "Compliance with financial hardship obligations is an enforcement priority for ASIC in 2024."
ASIC is seeking court declarations, financial penalties, and orders for adverse publicity against NAB and AFSH. Under s. 72 of the National Credit Code, lenders must respond to requests to modify credit contracts from customers who cannot meet their financial commitments. Permissible adjustments include deferring payments, reducing payment amounts, or extending loan terms. NAB’s alleged non-compliance highlights systemic issues in how lenders handle hardship applications, an area ASIC has been scrutinizing in recent years.
Earlier this year, ASIC released “Report 783: Hardship, Hard to Get Help,” which revealed widespread deficiencies in lenders’ approaches to supporting customers in financial distress. The report identified inconsistent processes, “cookie-cutter” solutions, and overly burdensome assessment procedures. NAB’s alleged failures are consistent with the themes raised in the report.
This legal action follows ASIC’s September 2023 case against Westpac for similar breaches, reflecting the regulator’s commitment to enforcing financial hardship obligations across the sector.
In the 2023/2024 financial year, the Australian Financial Complaints Authority (AFCA) reported 5,715 complaints related to financial hardship—a rise of 18 percent from the previous year. AFCA highlighted that many complaints involved inadequate communication or poor treatment during the hardship process, signalling an urgent need for improvement across the lending industry.
