Australian Securities and Investments Commission v National Australia Bank Limited (No 2)

The Federal Court of Australia was tasked with determining the penalty to be imposed on National Australia Bank Limited (NAB) for its contravention of section 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth). The Australian Securities and Investments Commission (ASIC) alleged that NAB engaged in unconscionable conduct by continuing to charge periodic payment fees to customers in circumstances where it knew it had no contractual entitlement to do so, omitting to inform its customers of the wrongful charging or suggest that they review any such fees debited to their accounts. The Court had already found in favour of ASIC on this allegation, leading to the declaration of unconscionable conduct. The key legal issues included whether ASIC had alleged one contravention or multiple contraventions, the appropriate penalty to be imposed, and whether the maximum penalty was adequate given the nature and extent of NAB's conduct.

The Court first considered whether ASIC's concise statement clearly alleged a single contravention or multiple contraventions. The Court found that ASIC's concise statement was clear and that NAB was entitled to treat the case as alleging a single contravention. Therefore, the Court concluded that ASIC's case did not clearly and distinctly allege multiple contraventions. In determining the penalty, the Court noted that the maximum penalty of $2.1 million was wholly inadequate given the nature of NAB's conduct and its disregard for its customers' rights. However, the Court was constrained by the statutory maximum penalty available under the ASIC Act. The Court also examined whether NAB's conduct was deliberate and whether it had previously engaged in similar conduct. The Court found that NAB's conduct was deliberate and that it had a history of similar breaches, justifying the imposition of the maximum penalty.

In conclusion, the Court imposed the maximum penalty of $2.1 million on NAB, acknowledging its inadequacy but constrained by the statutory limits. The Court also ordered NAB to publish a corrective notice to inform the public of the contravention. This decision highlights the tension between the statutory maximum penalties and the need for penalties to serve as effective deterrents, especially in cases involving financial institutions with a history of similar breaches.