The Australian Securities and Investment Commission (ASIC) will also allege that the bank has violated its Australian financial services licence requirements.
The accusations revolve around almost $55 million in fees charged to more than 800,000 accounts, affecting almost a million customers.
ASIC will allege in the Federal Court that Commonwealth Bank incorrectly charged monthly fees to customers who were actually entitled to have it waived. The waiver criteria were stated in their contracts with the bank.
This allegedly occurred over more than 9 years between June 2010 and September 2019.
The corporate regulator will attribute the erroneous charges to 30 instances of “inadequate or improperly configured” systems, plus manual mistakes by bank staff.
Commonwealth Bank acknowledged the court case in a statement to the ASX on Thursday morning.
“CBA has cooperated 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.”
ASIC has a problem with not just the fees
As well as the actual erroneous fees, ASIC accuses the bank of making “false or misleading” representations to customers that the charges were legitimate.
CBA is also accused of “misleading or deceptive conduct” for telling newly contracted customers that adequate systems were in place to calculate waivers.
ASIC alleges CBA’s failure to investigate the “multiple systemic issues” amounts to a breach of its obligations to “provide financial services efficiently, honestly and fairly”.
The bank apologised to impacted customers in its statement.
“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,” the company stated.
“The remediation of customers affected by the issues in these proceedings has been completed. CBA continues to invest in strengthening its systems and procedures.”
The court can legally only penalise for violations between April 2015 and September 2019, which equate to 2.4 million monthly charges totalling $11.5 million.
“ASIC commenced this proceeding because financial institutions need to have robust compliance systems to meet their obligations to customers,” stated the watchdog.
“Financial institutions need to put customers first, and customers should have confidence that the banks they deal with charge fees correctly.”
A date for the hearing has not yet been set.
At the time of writing, the CBA share price is trading flat at $86.02, down just 0.09%
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