BROKER UPDATE

The Australian Securities and Investments Commission (ASIC) on last Thursday sued Commonwealth Bank of Australia (CBA) for charging customers unnecessary monthly fees.

According to the regulator, between June 2010 and September 2019, CBA wrongly charged groups of customers who should have received fee waivers. In the statement, they mentioned this is affected more than 800000 customers, including pensioners, full-time students, people who had a home loan package deal, and recently-arrived migrants, to the tune of $55 million in fees.

“For the period between 1 April 2015 and 11 September 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, totaling around $11.5 million,” said an ASIC statement.

“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 criticized the CBA for making false and misleading representations to its customers every time that they charged them. This fact is resulting in a second charge from the regulator.

In the same way, as these charges were integrated into contracts between CBA and its customers, these contracts are also a way of false or misleading representations. All together these allegations bring to a third allegation: misleading or deceptive conduct by CBA.

As the watchdog said: “ASIC commenced this proceeding because financial institutions need to have robust compliance systems to meet their obligations to customers. Financial institutions need to put customers first, and customers should have confidence that the banks they deal with charge fees correctly.”

From the statement of the bank, we learn: “Commonwealth Bank of Australia acknowledges that civil proceedings have been brought by the Australian Securities and Investments Commission in the Federal Court against CBA alleging contraventions of certain misleading and deceptive conduct provisions of the ASIC Act and breaches of the general obligations owed by financial services licensees under the Corporations Act.”

“The proceedings relate to errors by CBA where monthly account fee waivers were not applied to accounts for certain customers between 1 June 2010 and 11 September 2019. CBA accepts these errors should not have occurred and has provided several breach reports to ASIC in relation to these issues. ASIC does not allege that any of the contraventions were deliberate. CBA has co-operated fully with ASIC during its investigation, however, it does not accept the way that the alleged contraventions have been formulated in the proceedings and therefore will defend the matter.”

“CBA apologizes to all customers impacted by these issues. Remediation payments of $64.2m (including interest) have been sent to customers. Of the total remediation payments approximately 90% related to two fee waiver issues that were identified in 2017 and 2019.”

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