National Australia Bank Ltd (ASX: NAB) shares are starting the week in the red.
In morning trade, the banking giant's shares are down almost 2% to $38.49.
Why are NAB shares falling?
Investors have been selling the bank's shares this morning after it was hit with legal action from the Australian Securities and Investments Commission (ASIC).
The corporate regulator announced the legal action in response to the big four bank failing 345 of its customers at their most vulnerable when they applied for hardship support from the bank.
ASIC alleges that between 2018 and 2023, NAB and its subsidiary AFSH Nominees did not respond to 345 hardship applications within the 21-day timeframe required by law.
ASIC chair Joe Longo said:
We allege NAB unlawfully failed to respond to their customers' appeal for help when they needed them most.
These customers included people who were domestic violence victims, battling serious medical conditions, dealing with business closures or job loss. NAB's failures likely compounded the already challenging situation for these people.
Longo notes that cost of living pressures have resulted in higher levels of hardship. It is partly for this reason that ASIX made financial hardship obligations an enforcement priority this year. He adds:
Amidst rising cost of living pressures, we have seen an increased number of customers reach out to their lenders for relief, and we have seen first-hand the impact on lives and livelihoods when lenders fail to appropriately support customers experiencing financial hardship.
Compliance with financial hardship obligations is an enforcement priority for ASIC in 2024. Earlier this year, we put the lending industry on notice on the release of our hardship report. We will not hesitate to take decisive action when banks and lenders fail to comply with their obligations.
ASIC is seeking declarations, pecuniary penalties, and adverse publicity orders against NAB and AFSH.
NAB response
This morning, NAB acknowledged the civil penalty proceedings commenced against it and AFSH Nominees by ASIC in the Federal Court.
The big four bank's group executive of customer & corporate services, Sharon Cook, apologised for what happened to the impacted customers. She said:
We're sorry that this happened when a number of our customers were in difficult situations and needed us to be there for them. We are focussed on ensuring these customers receive the support they need.
Following ASIC's report into hardship practices across the industry, we have also been working on a new approach to supporting customers in financial difficulty. This includes consulting with consumer advocates.
NAB advised that it was now considering the details of the proceedings brought by ASIC and would continue to cooperate fully with the regulator.
