SYDNEY (Reuters) - Australia’s corporate watchdog filed a lawsuit on Thursday against pension funds run by the wealth management unit of National Australia Bank Ltd, accusing them of charging fees with no service to hundreds of thousands of retirees.
The lawsuit, the second by the regulator against a big bank this week, reflects the heightened scrutiny of the financial sector as a public inquiry airs allegations of misconduct and wipes billions of dollars from company valuations.
The Australian Securities and Investments Commission (ASIC) has been criticised for not keeping a tight rein on finance firms, with the head of Australia’s sovereign wealth fund saying the regulator was “not awake at the wheel.”
The ASIC court filing, made public by the regulator on Thursday, said the NAB pension funds NULIS Nominees (Australia) Ltd and MLC Nominees Pty Ltd had charged fees for no service to about 300,000 retirees.
“The commencement of this civil penalty action is part of ASIC’s broad-ranging and significant investigations currently underway into fee for no service failures in the financial services industry,” the regulator said in a separate statement.
NAB chief lawyer Sharon Cook said in a statement that the bank was assessing the regulator’s case.
ASIC did not say whether the court action was related to the public inquiry, called a Royal Commission.
It said NAB had wrongly taken A$100 million from customers’ retirement accounts from 2012 to 2018.
NAB had agreed to return some of the fees, but “irrespective of the remediation, the conduct...did not promote confident and informed decision making by retail clients”, ASIC added.
The regulator said a separate action against NAB was expected to deliver more than A$850 million ($609.7 million) in compensation for NAB customers. ASIC did not give details of this action.
NAB has said it wants to sell its wealth management arm, in keeping with a broader push by lenders to focus on core operations and avoid any new regulations that result from the public inquiry into the financial sector.
Last month the inquiry heard allegations of widespread charging of fees for no service in the country’s A$2 trillion pension industry.
ASIC filed the Federal Court lawsuit against NAB a day after it said No. 2 lender Westpac Banking Corp had agreed to pay a A$35 million fine for using incorrect processes to approve 260,000 home loans.
In Thursday’s court filing, ASIC said it was seeking court declarations that the bank had broken the law and NAB should pay unspecified fines.
($1 = 1.3941 Australian dollars)
Reporting by Byron Kaye and Wayne Cole; Editing by Stephen Coates and Darren Schuettler