Defined Terms and Documents

09-222AD NAB responds to ASIC’s concerns regarding unsolicited companion credit card distribution

ASIC has raised concerns with National Australia Bank (NAB) regarding its distribution of American Express credit cards as ‘companion’ cards to NAB Qantas Gold account customers. ASIC was concerned that the distribution was unsolicited and potentially in breach of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

NAB has acknowledged ASIC’s concerns and has responded constructively to ASIC’s enquiries.

Specifically, ASIC was concerned that the distribution did not meet the requirements of section 12DL of the ASIC Act. Section 12DL prohibits the sending of unsolicited credit and debit cards, except where:

• a customer has requested the card in writing; or

• the card is sent in renewal or replacement of, or in substitution for, a card of the same kind previously sent to the customer.

ASIC was concerned because the distribution of American Express cards was not made in response to a request in writing from customers, and involved the sending of a companion card which was an additional card, and not a card sent in renewal, replacement or substitution of an existing card.

Between 10 February and 20 May 2009, NAB proactively migrated customers with an NAB Gold Rewards account (an account with a MasterCard or Visa card) to an NAB Qantas Gold account (an account with a MasterCard or Visa card, and a companion American Express card). This was a result of changes to the Qantas Frequent Flyer program that were effective from 1 April 2009.

As part of this migration, NAB either:

• sent customers two cards: a new MasterCard or Visa card (to replace the customer’s existing MasterCard or Visa card), along with a companion American Express card; or
• sent customers one card: an American Express card to accompany the existing MasterCard or Visa card held by the customer.

The companion American Express cards were intended to be used in conjunction with the MasterCards or Visa cards, with both cards linked to the same credit account. There were no changes to credit limits as a result of the migration.

In response to ASIC’s concerns, NAB is writing to all of its Qantas Gold account customers. They will either give customers who have already used the companion cards the choice not to retain the card (via an opt-out process) or give customers who have not used the companion cards the opportunity to confirm that they wish to retain the card in writing (via an opt-in process), otherwise the companion card will be automatically deactivated.

In both instances, customers’ NAB Qantas Gold accounts will remain open and their Qantas Gold MasterCards or Visa cards will continue to work.