CBA overcharged customers more than $2.2 million in interest
The Federal Court has found Commonwealth Bank of Australia made false or misleading statements and engaged in deceptive conduct on more than 12,000 occasions.
Justice Michael Lee found that CBA breached financial services law 12,119 times when charging a rate of interest on business overdraft accounts substantially higher than what customers were advised.
The Court also made a declaration that on each of the 12,119 occasions that CBA breached the ASIC Act, it also breached its general obligation as a financial services licensee to comply with financial services laws, in contravention of the Corporations Act.
CBA admitted that from December 1, 2014, to March 31, 2018, it provided customers with terms and conditions for certain credit facilities that stated an interest rate to be charged or that had been charged. It also sent periodic account statements to customers referencing the rate at which that interest rate was being charged and, due to a systems error, charged more than 1510 customers a different, higher interest rate on their overdraft accounts.
In most cases, the original amount customers were told they would be charged was 16% per annum, but in most cases where breaches occurred customers were being charged 34% per annum.
ASIC said the total overcharged interest exceeded $2.2 million and that CBA's conduct in relation to this resulted from inadequate systems and processes.
ASIC commissioner Sean Hughes said: "Financial services institutions need to have appropriate systems, governance, and controls in place to ensure they deliver on promises made to their customers. By CBA failing to take adequate steps to rectify this error after it was identified, this resulted in customers continuing to be overcharged."
"Investment in good systems needs to be prioritised by all financial services institutions to ensure trust in our financial system is re-built and to avoid a repeat of these failures in the future."
ASIC said it will seek pecuniary penalties and other orders against CBA at a penalty hearing on April 6, 2021.