ASIC has announced that it has commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank of Australia (CBA) for charging a rate of interest on business overdraft accounts substantially higher than what its customers were advised.
ASIC alleges from 29 December 2011 to 31 March 2018, due to a systems error, CBA charged more than 2,200 customers a higher interest rate on their overdraft accounts (in most cases approximately 34% per annum) instead of 16% per annum provided for by the relevant terms and conditions and provided periodic account statements which constituted representations understating the rate of interest at which interest had been and/or would be charged.
ASIC says the total overcharged interest exceeded $2.9 million.
ASIC alleges that CBA attempted to manually fix the overcharging error after a complaint was made to the bank in 2013. The manual fixes were unsuccessful, and customers continued to be overcharged. ASIC alleges that from 1 December 2014 to 31 March 2018, being within the six-year limitation period, CBA engaged in conduct that contravened financial services laws.
ASIC says 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.
If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.
Author: David Jacobson
Principal, Bright Corporate Law
Email:
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
