Justice Penelope Neskovcin said the reasons customers gave for their hardship included medical issues or emergencies, bereavement, family violence, family breakdown, the pandemic, business failure, natural disaster and unemployment.

She said the breached National Credit Code provisions were important to help protect customers and the number of breaches was “high, indicating the significant scope – and thereby the seriousness – of the contravening conduct”.

The Australian Securities and Investments Commission (ASIC), which brought the action, said the penalty highlighted the seriousness of the failures to support customers facing financial hardship.

“These failures likely made an already challenging time in people’s lives far worse,” ASIC deputy chair Sarah Court said.

“This penalty sends an important message to other financial institutions – customers should be at the centre of what you do.”

While the customers didn’t suffer any specific losses, the court made a “reasonable inference” the failure to respond might have “compounded any financial difficulty those customers considered themselves to be under and any associated distress”.

The parties agreed maximum penalties could have extended well into the hundreds of millions but the judge found the figures were so high as to be “practically meaningless” and accepted the proposed penalty of $15.5 million.

“ASIC will not hesitate to take action when banks and lenders fail to comply with their obligations.”

The court ordered NAB to pay $13 million and AFSH Nominees to $2.5 million, while also both covering ASIC’s costs.

It found the failures did not involve senior management at either company.

The court considered the total fine, which is 0.22 per cent of NAB’s net profit for 2024, to be a substantial deterrent.

“The proposed penalty of $15.5 million is substantial and ought not be regarded by NAB (or a comparably sized business) as an ‘acceptable cost of doing business’, and it can be expected to deter any potential wrongdoer from engaging in similar contravening conduct,” Neskovcin wrote.

The breaches occurred between 2018 and 2023, both companies took measures to ensure they weren’t repeated and NAB apologised to those affected.

Sixty customers were paid an average of about $540 each for the financial and non-financial impact of the breaches.

ASIC had flagged in May last year that lenders weren’t doing enough to support customers in financial hardship.

The law allows mortgageholders who don’t think they’ll be able to meet their payments to inform their lender, who must then reply or ask for more information within 21 days.

“The hardship regime exists to help customers who are experiencing financial difficulty, often caused by significant life events such as serious illness, sudden unemployment and domestic violence,” Court said.