ASIC has commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank, over the bank charging an interest rate on business overdraft accounts that was substantially higher than what customers were advised.
ASIC has alleged that from 29 December 2011 to 31 March 2018, CBA charged more than 2,200 customers a different, higher interest rate than they were advised on their overdraft accounts, accumulating to an overcharged total exceeding $2.9 million.
The rate, which customers were advised would be 16 per cent per annum in most cases, was said to rocket to around 34 per cent per annum.
The customers had been advised otherwise in terms and conditions the bank provided for certain credit facilities and in periodic account statements referencing the rate at which interest was being charged.
CBA allegedly attempted to manually fix the overcharging error after a complaint was made to the bank in 2013.
The manual fixes were unsuccessful, and customers continued to be overcharged.
ASIC has also claimed that from 1 December 2014 to 31 March 2018, being within the six-year limitation period, CBA engaged in conduct that contravened financial services laws.
Specifically, that on 12,119 occasions, CBA was said to:
ASIC is seeking declarations, pecuniary penalties and other orders against CBA.
The date for the first case management hearing is yet to be scheduled by the Court.
CBA’s conduct was the subject of a case study by the Hayne royal commission.
The bank has set up a remediation program that has os far compensated $4 million to the customers impacted in the case.
ASIC previously obtained a $5 million penalty against CBA for failures of its AgriAdvantage Plus Package, which included, among other things, overcharged interest on loans and fees.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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