A federal court judge has labelled a $2.1 million penalty for National Australia Bank (NAB) as “woefully insufficient” after the bank wrongfully and Knowingly Charged Fees to thousands of customers.

On Friday, the federal court said NAB had engaged in “unconscionable conduct” by continuing to charge Periodic Payment Fees on 74,593 occasions, totaling $139,845 across 2888 personal banking customers and 513 business banking customers.

Federal court justice Sarah Derrington said NAB had unjustifiably advanced its self-interest whilst knowing that its customers were oblivious to the wrongful charging that was taking place.

“It 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,” she said.

“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 court found that NAB continued charging these incorrect fees between January 2017 and July 2018 despite knowing it had no contractual entitlement to do so, and that the central cause was the bank’s inability to manage its own computer systems and its unwillingness to allocate sufficient resources to address the problem in a timely manner.

Derrington said NAB had received the maximum penalty for a single contravention, but that it was “without question, woefully insufficient” for the circumstances.

“Some solace can be taken in the fact that, in the time that has passed since the contravening conduct in this case occurred, the relevant provisions of the Australian Securities and Investments Commission (ASIC) Act have been updated to permit the imposition of a substantially higher penalty,” she said.

NAB has paid about $9 million in remediation to affected customers who incurred incorrect periodic payment fees from August 1, 2001.

Justice Derrington also ordered NAB to publish an adverse publicity notice on its website and pay ASIC’s costs.

A NAB spokesman said the issue related to the incorrect selection of a fee by NAB when setting up a payment arrangement within personal and business banking accounts.

“We apologise to all impacted customers,” they said.

“We have completed a remediation program to set things right and repaid more than $8.3 million of fees plus interest to affected customers.”