The Commonwealth Bank is being sued for misleading conduct after allegedly charging nearly a million customers almost $55m in fees it was not entitled to.
Corporate regulator ASIC has started civil penalty proceedings in the Federal Court alleging the CBA incorrectly charged monthly access fees to customers.
ASIC alleges the bank incorrectly charged customers monthly access fees between June 1, 2010 and September 11, 2019 when they were entitled to fee waivers under their contracts.
Almost $55m in fees were charged to nearly one million customers and more than 800,000 accounts.
But the court can only impose a penalty for the period between April 1, 2015 and September 11, 2019 when ASIC alleges the bank wrongly charged monthly access fees about 2.4 million times, totalling around $11.5m.
The regulator alleges the incorrect charges arose due to inadequate systems and processes and staff errors.
“ASIC alleges that CBA incorrectly charged monthly access fees to customers entitled to fee waivers due to systems and processes that were inadequate or improperly configured in 30 different ways, as well as due to manual errors made by CBA staff,” the regulator said in a statement on Thursday.
The bank also made false or misleading representations to customers that it was contractually entitled to charge the fees when it was not, ASIC alleged.
It’s further alleged the bank made false or misleading representations that its systems were adequate to provide fee waivers where they applied when they were not.
ASIC also alleges CBA failed to provide financial services efficiently, honestly and fairly.
“By engaging in the above conduct, ASIC alleges that CBA also engaged in misleading or deceptive conduct and contravened its obligation as an Australian financial services licensee to comply with financial services laws,” the regulator said.
The CBA received about 14,000 customer complaints about the overcharging from June 2010 to May 2019.
It first identified problems with its systems that caused the overcharging in January 2011. It notified ASIC in December 2018.
As at December, the bank had paid back almost $66m to almost a million customers who were overcharged.
However, not all had been paid back and the bank had not paid components of compensation or interest for some customers, the regulator said.
ASIC stated it took the court action because financial institutions needed to have robust compliance systems to meet their customer obligations.
“Financial institutions need to put customers first, and customers should have confidence that the banks they deal with charge fees correctly,” the regulator said.
The CBA has apologised to customers and said it has completed rectifying the issues with customers affected in the ASIC proceeding.
“CBA accepts these errors should not have occurred and has provided several breach reports to ASIC in relation to these issues,” the bank said in a statement.
“ASIC does not allege that any of the contraventions were deliberate.”
The bank said it has co-operated fully with ASIC during its investigation, but will defend the matter.
“(The CBA) does not accept the way that the alleged contraventions have been formulated in the proceedings,” it said.
“CBA apologises to all customers impacted by these issues.”
The bank said it continued to invest in strengthening its procedures and systems.
The matter will listed as a case management hearing on a date to be set.