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CommBank pays out $64m after a million customers overcharged

The Commonwealth Bank has paid out $64 million to customers for charging fees it had no right to after Federal Court proceedings were launched against it claiming deceptive and misleading conduct.

Apr 01, 2021, updated Apr 01, 2021
CBA has agreed to sell its insurance arm for $625,000. (Pic The New Daily)

CBA has agreed to sell its insurance arm for $625,000. (Pic The New Daily)

The bank today accepted errors were made and said it had made several breach reports to the Australian Securities and Investments Commission relating to the issue. It also apologised to its customers and pointed out that ASIC does not allege the charges were deliberate.

ASIC started civil penalty proceedings in the Federal Court against the CBA alleging that, between 1 June 2010 and 11 September 2019, the bank incorrectly charged monthly access fees to customers who were entitled to fee waivers because they met certain criteria under their contracts with the bank.

That period included seven months following the Banking Royal Commission’s final report on the sector which revealed widespread abuses by banks and other financial sercvices companies.

“Almost $55 million in fees were charged to nearly one million customers and more than 800,000 accounts,’’ ASIC said.

Last year the bank made provisions of more than $800 million to compensate customers for unlawful financial advice and to fix its systems.

ASIC said that for the period between April 1, 2015 and September 11, 2019, the period for which the court can impose a penalty, ASIC alleges that CBA incorrectly charged monthly access fees on approximately 2.4 million occasions, totalling around $11.5 million.

“ASIC alleges that CBA incorrectly charged monthly access fees to customers entitled to fee waivers due to systems and processes that were inadequate or improperly configured in 30 different ways, as well as due to manual errors made by CBA staff.

“ASIC also alleges that each time CBA charged the fees or notified a customer via bank statement of the charging of each fee, it made false or misleading representations that it was contractually entitled to charge the fees when it was not.”

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ASIC also said that each time CBA entered into a contract with a customer to establish an account where a fee waiver may apply, it made false or misleading representations that it would have adequate systems and processes in place to provide the fee waivers, when it did not.

ASIC also alleges that CBA failed to provide financial services efficiently, honestly and fairly by failing to apply monthly access fee waivers to customer accounts after it had represented it would do so.

The bank said the $64 million in compensation included interest and had already been sent out to customers.

“Of the total remediation payments, approximately 90 per cent related to two waiver issues that were identified in 2017 and 2019,” the bank said.

 

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