The Australian Securities and Investment Commission is bringing the Commonwealth Bank of Australia (CBA) to Court, alleging the bank charged monthly access fees to customers when it was not entitled to do so.
ASIC estimates that CBA charged a total of $55 million in fees to nearly one million customers and more than 800,000 accounts, between 1 June 2010 and 11 September 2019.
Civil penalty proceedings in the Federal Court against CBA can only be imposed for the period between 1 April 2015 and 11 September 2019.
This means CBA will be taken to Court for misleading practices on approximately 2.4 million occasions, totaling around $11.5 million, according to ASIC.
The wrongfully charged monthly access fees were due to inadequate or improperly configured systems and processes, as well as due to manual errors made by CBA staff, the regulator found. Customers were entitled to fee waivers because they met certain criteria under their contracts with the bank.
This is not the first time CBA is found guilty of charging fees when it is not entitled to do so. In 2020, CBA was ordered to pay a $5 million penalty after the Court found that CBA had breached the ASIC Act and Corporations Act for failures of their AgriAdvantage Plus Package (AA+ Package).
From May 2005 to December 2015, CBA sold customers the AA+ Package, which entitled them to benefits in the form of fee waivers, interest rate discounts, and bonus interest on savings, in exchange for the payment of package fees on 22 CBA products.
A total of 8,659 customers were impacted by CBA’s conduct on 131,542 occasions, in circumstances where CBA benefited from a total of $8,087,276.23 in incorrectly charged fees and interest on loans, and underpaid interest on savings.
Also in 2020, CBA and its subsidiary Colonial First State Investments Limited (CFSIL) were taken to Federal Court for an alleged conflicted remuneration paid by CFSIL to CBA between 1 July 2013 and 30 June 2019.
More than $22 million in conflicted remuneration was paid by CFSIL to CBA for the distribution of Essential Super, a superannuation product issued by CFSIL. CBA distributed the Essential Super product using its branch and digital channels. Approximately 390,000 individuals became members of the Commonwealth Essential Super fund under the arrangements.
