Civil penalty proceedings have commenced in the Federal Court after ASIC alleged that the Commonwealth Bank of Australia had been unlawfully charging monthly access fees to its customers without permission. The CBA has been accused of implementing the access fees from 1 June 2010 and 11 September 2019, charging around $55 million in monthly payments to almost one million customers.
Over 800,000 accounts which should’ve been entitled fee waivers based on specific criteria being met under bank contracts were found to have been incorrectly charged between the aforementioned period. The court is only able to impose a penalty for the time period between 1 April 2015 and 11 September 2019, however, within which ASIC is claiming that CBA made incorrect charges for monthly access fees which totalled around $11.5 million, equivalent to around 2.4 million unnecessary payments.
The incorrect fees have been found to be a result of manual errors executed by CBA staff members, as well as improperly configured or inadequate processes and systems which dismissed the fact that a vast number of customers were entitled to waivers on any fees. CBA was also found to have produced misrepresented justifications of fees on customer bank statements, which suggested that the company was entitled on a contractual basis to implement the monthly charges.
Further misrepresentations were found in the form of CBA claims that it could provide the necessary functionalities to account for customers who were entitled to waiver fees, when in fact it did not have the required processes and systems to do so. With all of the allegations accumulated, ASIC has come to the conclusion that CBA has not served its duty as licensee of Australian financial services to comply with the laws put in place for financial services.
The Australian Securities and Investments Commission decided to commence this proceeding as financial institutions are required to have comprehensive compliance systems in place in order to meet customer obligations. Financial institutions are expected to put customers first in any given scenario, and customers should feel truly confident that their banks are charging correct and lawful fees. The proceeding is set to be listed for a case management hearing on a date expected to be confirmed in the near future.
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