The NAB seems to have been caught out doctoring its website to remove details about refunds they are legally obliged to publish. Lynton Freeman reports.

It seems the National Australia Bank (NAB) has been caught out doctoring its website over its APRA enforced customer refunds.

Scrutiny of the NAB’s ‘Past Refund Activities’ reveals that on May 11, 2011, there were three September 2006 listings for refunds.

The first was dated September 22, 2006, for NAB Relationship Footings - Benefits Refund.

The second was dated September 25, 2006, for Home Loan Service Fee.

The third was dated September 28, 2006, for Fixed Rate Interest Only Loan - Interest Refund.

A frame taken from today's NAB website reveals that the NAB has removed two of those September 2006 refund dates:



It is believed that the refunds dates of September 25 and 28 were, in fact, removed within the past six weeks.

But why were these particular refund dates removed? Did the NAB redaction have anything to do with a Court case now before the Federal Court of Australia — and the newly announced wide-ranging Senate Economics Committee Inquiry into banking operations?

The NAB has an embarrassing litany of enforced customer refunds.

On November 10, 2005, in a revealing article in The Age by Marc Moncrief, the then CEO of NAB Australia, Ahmed Fahour made some extraordinary admissions. Moncrief wrote:
'Scandals of the past still haunt National Australia Bank, with the delivery of its annual results tainted by news that some customers had been overcharged a total of $21.6 million since 1992.'
Fahour told Moncrief the NAB would 'own up to the mistake':
'He estimated 50,000 fixed-rate interest-only business and investment loan accounts might have been overcharged because the process for changing the interest rate on the accounts when fixed-rate periods ended had failed.'

'The bank had set aside $18 million after tax in its full-year accounts to refund to customers.'
Fahour (now CEO of Australia Post) told Moncrief the 'blunder 'was discovered as part of an ongoing review of manual processes and systems:
'The bank began the investigation after rogue traders lost $360 million at its foreign exchange desk last year, a scandal that eventually claimed the scalps of the bank's chairman and chief executive.

'In July NAB disclosed that the review had found customers had been overcharged $80 million on business and private accounts.'
"Culture was the thing that got this place into trouble; arrogance was the thing that got this place into trouble," Mr Fahour told The Age. "It wasn't the rogue traders themselves. It was something that's been building up for years. This is not a problem of today. This is a problem of rectifying history."



However, it should be noted that the refunds listed on the website failed to mention the thousands of rural business loans in which NAB customers were granted Government Interest Subsidies.

The website adjustments after 11 May 2011 coincided with a Federal Court matter in which a self-represented litigant had requested that NAB settle on a claim based on allegations defined in court records as far back as 1998 and where NAB employees admitted they had failed to audit the customer’s accounts prior to any court action.

In this case, the NAB denied allegations of account manipulation in 2002 in the Federal Court at Bankruptcy and again in 2003 in the Queensland Supreme Court and the High Court.

But in 2004, given Ahmed Fahour's admissions of the NAB's corporate culture, the litigant asked NAB to proceed to ACCC, ASIC, APRA to identify the account illegalities and unlawful processes. But NAB declined. Further, in a later case that year NAB denied allegations it had ever issued “dummy” bank statements.

Again, in the Federal Court, a comprehensive list of NAB's misuse of Bank Statements, deposits and deductions was placed in evidence before the Court. Again, NAB denied the facts.

Default interest in the case was identified by NAB between the hearing and judgement in that Court but the facts of how that default interest was reached remain hidden from public view — and, rather unbelievably, even from the litigant's view.

By 2006, the litigant had complained to the Queensland Attorney General and returned to the Supreme Court with an action for Abuse of Process and deceit. Judgment came down against the litigant on 1 September 2006.

Then, four weeks later, on 28 September 2006, the NAB identified the facts of the refund adjusting statements and default interest refunds to affected customers on its website.

Given this admission by the NAB, the litigant then filed an action in the Federal Court to have the Orders changed. The main claim was at all times that the NAB had denied interest charges had been manipulated to force him to default and the misuse of default interest had partly caused his problems.

They were based on NAB not accepting his subsidy deposits, but instead returning them to the source, thereby increasing his interest rates via out-of-date contracts, default interest and changing his category of risk such that higher arbitrary interest rates were charged — all since admitted.



In the Supreme Court in 2006, NAB had admitted some facts of the accounts it had earlier denied in the Federal Court during several actions, including bankruptcy, failure to properly account for interest payments and write downs in values for sale purposes, and not issuing correct bank statements.

Last Friday, March 23, the litigant was again in the Federal Court against the NAB.

The NAB had wiped the September 28, 2006 Default Interest Refund particulars from its website.

This meant the presiding Judge or his Associate could not find the published particulars or indeed the refund if needed, thereby damaging the litigant's credibility before the Court by ridding itself of evidence it is obliged by APRA regulations to publish.

How many other litigants are facing this same situation?

Based on the the refund activities, it is estimated that many flawed judgments have been made with these incorrect quantums of debt; especially given Court costs in Queensland are $6,000+ even to file. Many other banks may be pursuing the same practices, as hinted on 19 March 2012 in The Australian by NAB past deputy chief executive Michael Ullmer.

The litigant in question claims that NAB during one year actually refused deposits of over $80,000 and then refused to place his interest payments into his account — and then charged him default interest.

Given the NAB's public admissions, they thus gained a financial advantage, using that advantage to eventually bankrupt the NAB customer.

This satisfied the NAB unwritten rule of cover-up as defined and admitted by NAB in a 2004 APRA investigation into “irregular” trading by the bank.

[Read the APRA Report here.]

As part of the NAB's 2004 admissions, it introduced a statutory committee to investigate its over-deductions of interest and other account debits and, where found outside of regulation, refunding the funds and providing fresh and adjusted records.

Pressure is building on NAB to provide records of all failures to place missing interest payments and other Commonwealth payments into accounts and where default interest has been charged against those accounts.



It is inevitable that NAB's habit of pressuring farmers and small business persons would lead to the request for the full facts when NAB unlawfully withheld deposits of Government Subsidies.

However, former NAB Deputy Chief Executive Michael Ullmer defined the NAB process of cultural change was still a work in progress after 7 years.('Not all bankers fret over image', The Australian, March 19, 2012.)

The doctoring of NAB's refund activities suggests the NAB has reverted to habit, maintaining that part of their culture that points to intentional secrecy, denial and a failure to be open and transparent with authorities and their customers and shareholders.

Is this a fundamental move in NAB culture back to the bad old ways or are they changing as stated by Michael Ullmer? Where is the Banking Code of Practice and its fairness provisions?

Accounting processes in NAB have demanded the auditing of all accounts where manual debits and some computer imposed interest debits were deducted. But if NAB is forced to move to audit Government scheme deposits it will then need to further consider default interest deductions refunds on a much broader scale.

For NAB, its claim to be the most advanced bank in terms of customer accountability may be under threat with the new Senate inquiry into the Post-GFC banking sector. Its Terms of Reference are very wide and may encourage the participation of disaffected customers in bank standard practice for customer disputes.

In customer refunds dating back to 1992, such as default interest refunds, but continuing late into this decade, could NAB have decided to withdraw publication of the facts of the refunds?

Has the NAB process of customer dispute resolution changed, now that court fees have increased beyond the value of most small disputes and refunds?

At least two of the Senate Economics Committee Terms of Reference could address public concern of failed best practice:
(d) the impact of borrowing and lending practices in the banking sector both during and since the global financial crisis.

(e) the need for further consideration of the state of the broader finance and banking sector.
The Banking competition inquiry has led to changes in settlements, new securities exchange facilities and allows for further regulation of derivatives. Will this inquiry lead to the increase in customer responsibility the sector requires?

Major investigations into valuations and new proposals for valuer panels for ADIs (proposed APRA Guidelines) hopefully can be examined publicly as part of the inquiry. A wide ranging inquiry may draw together those persons seriously affected by the anonymity of NAB executive decisions.

This allows the Senate, with customer submissions, the opportunity to investigate whether the Banking Code of Practice should once again become statutory and implement changes in the Financial Ombudsman’s Office and Code enforcement authorities.



For too long, the debt recovery processes of Australian Banks have lacked proper supervision and accounting practices have also long lost their credibility. NAB past and current refund activities have, for 8 years and back to 1982, shown how small and large unlawful collections unidentified in the NABs’ customer accounts amalgamate to large sums in the corporate accounts.

The Senate may consider it necessary for the Authorised Deposit Taking Institution’s (ADI) responsibility for the accuracy of the customer’s account to be reinforced.

Some changes could include a Commonwealth Property Law Act, that creates supervision of ADI practices in debt recovery including a better system of debt verification, at demand, at recovery proceedings, at Bankruptcy and penalties for ADI breaches.

NAB refund activities show that there would be very few Judges, Magistrates and Registrars, who have not approved innacurate NAB debt recovery values.

All are instances of initial transactions identified by internal regulatory committee and show the necessity for a higher standard of accounting in recovery processes.

Many Government schemes rely on the integrity of ADIs, but misuse of deposit taking processes by some have destroyed the value of the schemes for participants, in particular the predatory practices involved with forcing mortgages into default by failing to renew Fixed Interest Rate Loans on time.

NAB has also withdrawn a Home Loan Service Fee refund on its site — a serious complaint process participant.

A Commonwealth Property Law Act may contain a provision that when an ADI is reducing the value of an asset and it intends to recover the asset, then a first offer basis should exist for the current contract holder.

NAB past refund activities, and the litigant's situation above, identify the need for a method of correcting the inequity between the offending ADI and customers who have been dispossessed.

The ADI, by denying the act at the time and later conceding the act, avoids statutory relief for the customer. In fact, they have no adequate statutory relief — a point that the Banking Inquiry could consider.

A sobering thought for the Senate may come from a report into how the morality in Australian business is influenced by banking practice.

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