The Federal Court found between January 2017 and June 2018, NAB charged customers fees to make periodic payments, without a contractual right to do so.
NAB charged $1.80 to set up a periodic payment to another NAB account, and $5.30 for an account with a different bank, but certain transactions such as payments to NAB home loans would be exempt.
On 74,593 occasions, NAB either charged a fee when the customer should have been exempt, or charged $5.30 when the correct fee was $1.80.
There were 2,888 personal banking customers and 513 business banking customers affected, with NAB receiving $139,845 in total.
Judge Roger Derrington said the bank was aware the overcharging was taking place, and failed to devote adequate resources to addressing the problem.
"[NAB] deliberately and cynically took advantage of its customers’ unawareness, and was prepared to allow the overcharging to continue whilst it searched, admittedly in good faith, but without any great diligence, for a solution," Mr Derrington ruled.
"Such moral dereliction would seem to reflect an inherent sense of entitlement, possibly precipitated by a view that no real harm would come to the bank even if its conduct was detected.
"It is, perhaps, also a product of a corporate culture that places a low priority on the observance of the law and on respect for its customers’ legal rights."
The $2.1 million fine was the maximum allowed, and is on top of about $9 million NAB has already paid in remediation to affected customers.
Justice Derrington also ruled Australia's third largest bank will need to pay ASIC's expenses for bringing the case to light.
He called the maximum $2.1 million penalty "woefully insufficient" and said future offenders could expect a much greater fine.
"In the time that has passed since the contravening conduct in this case occurred, the relevant provisions of the ASIC Act have been updated to permit the imposition of a substantially higher penalty," he said.
Will this hurt NAB?
At 10am this morning, NAB's share price dropped to $28.40, a 1.1% drop from yesterday's closing price ($28.75).
Since then though, the stock has rallied, reaching $28.68 as of 2pm.
As of yet, there has been no official response from NAB, but Justice Derrington ruled it will need to post an adverse publicity notice on its website, explaining the situation.
NAB has a market capitalisation of around $90 billion and residents' assets totalling more than $900 billion.
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