Australia regulator sues NAB, first lawsuit resulting from bank inquiry
* NAB accused of taking loan applications from unlicensed
* First lawsuit stemming from Royal Commission inquiry
* NAB says it is assessing the allegations
(Adds NAB response, royal commission context)
By Byron Kaye and Paulina Duran
SYDNEY, Aug 23 (Reuters) - An Australian regulator filed a
lawsuit on Friday against No. 3 lender National Australia Bank
Ltd accusing it of taking loan applications from
unlicensed "introducers", the first lawsuit stemming directly
from a finance sector inquiry.
The Australian Securities and Investments Commission (ASIC)
said NAB had breached a law which prevents banks from dealing
with unlicensed loan professionals in relation to 297 loans
between September 2013 and July 2016.
"This conduct exposed the customers and NAB to the risk of
wrongful conduct by the introducer, including possible fraud,"
ASIC said in a court filing published on its website.
"It also exposed customers to a risk that loans would be
advanced to them that were unsuitable."
Introducer programs, where banks pay bonuses to third
parties for sending potential customers to them for loans, were
among many practices scrutinised at a powerful Royal Commission
inquiry which accused the industry of acting in a way that put
short-term profit ahead of customer needs.
At the inquiry, NAB disclosed that, as part of its
introducer scheme, some employees had accepted over-the-counter
cash bribes to facilitate loans based on fake documents.
Although ASIC, the regulator, has brought lawsuits against
lenders in relation to issues that were discussed at the
inquiry, the action against NAB was the first sparked by
allegations made during hearings, an ASIC spokesman told
ASIC said in the Federal civil court filing that it was
seeking unspecified fines and a formal finding of wrongdoing, as
well as an order that the bank pay its court costs.
NAB Chief Legal and Commercial Counsel Sharon Cook said the
bank took the lawsuit seriously and would assess the
allegations, noting that the bank had announced that it would
end the introducer program in October.
"Throughout the Royal Commission we heard clearly that our
actions need to change to meet the expectations of our customers
and the community," Cook said in a statement.
As well as calling for widespread changes to the Australian
financial sector, the Royal Commission also criticised
regulators, accusing them of working too closely with the
companies they were meant to be regulating.
ASIC has since said it plans to take more financial
operators to court, while the Australian Prudential Regulation
Authority (APRA) has said it plans to take a more public
enforcement role. APRA has traditionally been in charge of
ensuring financial companies remain stable.
(Reporting by Byron Kaye and Paulina Duran; Editing by
First Published: 2019-08-23 04:59:09
Updated 2019-08-23 05:59:38
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