Commonwealth Bank of Australia (ASX: CBA) has been ordered to publish notices on its own website and newsroom that it had misled customers.
The Federal Court earlier this year fined the bank $7 million for overcharging interest on overdraft accounts. Over a period of 6 years, customers were charged a whopping 34% per annum even though documentation stated they would be charged 16%.
This week the court forced the bank to self-publicise, at its own expense, an admission of its sins.
This must include both a written and audio-visual mea culpa on its main website and its newsroom. The notice must appear on top of the pages as a picture overlay titled: 'Notification of misconduct by CBA' and must be active for 90 days.
The bank has until 27 August to submit the proposed video message to the court.
Commonwealth Bank shares were down 1.36% on Monday afternoon, trading at $102.62.
Image source: Getty Images
CBA shown the stick
ASIC commissioner Sean Hughes said the self-publication order is meant to be a crucial deterrent for CBA and other big banks, in addition to the massive monetary penalty.
"Not only does it ensure that CBA's customers and the general public are aware of the misconduct, it sends a strong message that there is significant financial and reputational risk for failing to have the systems in place to prevent overcharging."
Commonwealth Bank had acted illegally 12,119 times in overcharging interest for business overdraft clients.
Earlier this year, the bank did not contest the misleading and deceptive conduct accusations. But its lawyers did try to argue the fine down to a range between $4 to $5 million.
Ultimately, the Australian Securities and Investments Commission got its way in April when the court handed down a $7 million penalty.
"CBA's delay in remediating customers following this error was an aggravating factor in the court's determination of the penalty," Hughes said at the time.
"When financial institutions discover overcharging, they must take immediate action to remediate impacted consumers."
