Overcharging customers costs bank $174m
Michelle Innis, Sydney Morning Herald, 14th of June 2006
NATIONAL Australia Bank has said repaying customers who had been overcharged would cost close to $174 million, not the $18 million it had earmarked last year.
About 110,000 customers who had NAB Choice loans paid more than one package fee, about 50,000 who had interest-only loans paid too much interest, and the bank had wrongly deducted the State Government bank accounts debits tax from 140,000 savings accounts. The problems, which date back to 1994, arose because of faults in NAB's information technology systems, and human error.
An Australian Consumers Association spokesman, Nick Coates, said the bank's errors would be almost impossible for consumers to detect.
The bank said it has spent about $10 million reviewing its systems, advertising its plan to compensate consumers and searching for customers who are owed money.
It said repaying the money overcharged was complicated by the length of time that had passed and the complex nature of people's financial affairs.
"NAB is making a huge effort to get the money back to consumers but you have to wonder about all the banks' systems," Dr Coates said. "Are other financial institutions waiting for consumers to complain about their systems before reviewing charges?"
NAB has suffered a number of major setbacks which have dented confidence in recent years. It lost almost $4 billion in its US HomeSide lending venture; it mispriced units in its MLC unit trusts and later had to make good $65 million in costs to investors; and it lost a further $360 million after traders on its foreign exchange desk reported false trades to cover losses.
