ASIC commences civil proceedings against CBA
The Commonwealth Bank is facing civil proceedings initiated by the Australian Securities and Investments Commission (ASIC) over charging a rate of interest on business overdraft accounts substantially higher than what its customers were advised.
The charges stem from issues raised at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
ASIC announced today that the it would be alleging that from 29 December, 2011 and 31 March, 2018, the Commonwealth Bank:
- Provided customers with terms and conditions for certain credit facilities that stated an interest rate to be charged or that had been charged (in most cases, 16% per annum);
- Sent periodic account statements to customers referencing the rate at which interest rate was being charged (in most cases, 16% per annum); and
- Due to a systems error, charged more than 2,200 customers a different, higher interest rate on their overdraft accounts (in most cases approximately 34% per annum).
ASIC said the total overcharged interest exceeded $2.9 million and the regulator would be alleging that the bank attempted to manually fix the overcharging error after a complaint was made in 2013 but the manual fixes were unsuccessful and customers continued to be overcharged.
It said it would also be alleging that from 1 December, 2014 to 31 March, 2018, being within the six-year limitation period, the bank engaged in conduct that contravened financial services laws. It said that specifically on 12,119 occasions CBA:
- Made a misleading representation in contravention of s12DB(1)(g) of the ASIC Act;
- Engaged in misleading or deceptive conduct, or conduct that was likely to mislead or deceive, in contravention of s12DA(1) of the ASIC Act; and
- Failed to comply with its obligation to comply with financial services laws in contravention of s912A(1)(c) of the Corporations Act.
ASIC is seeking declarations, pecuniary penalties and other orders against CBA.
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