ASIC has commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank of Australia (CBA), alleging that it charged monthly access fees to customers when it was not entitled to do so.
ASIC alleges that, between 1 June 2010 and 11 September 2019, CBA incorrectly charged monthly access fees to customers who were entitled to fee waivers because they met certain criteria under their contracts with the bank. Almost $55 million in fees were charged to nearly one million customers and more than 800,000 accounts.
For the period between 1 April 2015 and 11 September 2019, the period for which the Court can impose a penalty, ASIC alleges that CBA incorrectly charged monthly access fees on approximately 2.4 million occasions, totaling around $11.5 million.
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.
ASIC also alleges that each time CBA charged the fees or notified a customer via bank statement of the charging of each fee, it made false or misleading representations that it was contractually entitled to charge the fees when it was not.
Further, ASIC alleges that each time CBA entered into a contract with a customer to establish an account where a fee waiver may apply, it made false or misleading representations that it would have adequate systems and processes in place to provide the fee waivers, when it did not.
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.
ASIC also alleges that CBA failed to provide financial services efficiently, honestly and fairly by:
failing to apply monthly access fee waivers to customer accounts after it had represented it would do so;
failing to maintain systems and processes that were capable of meeting obligations to customers; and
failing to undertake an appropriate review of the multiple systemic issues that contributed to the ongoing failure of its systems to apply monthly access fee waivers in accordance with the bank’s contract with its customers.
ASIC commenced this proceeding because financial institutions need to have robust compliance systems to meet their obligations to customers. Financial institutions need to put customers first, and customers should have confidence that the banks they deal with charge fees correctly.
The proceeding will be listed for a case management hearing on a date yet to be set.
