In Australian Securities and Investments Commission v Commonwealth Bank of Australia [2020] FCA 1543 the Federal Court of Australia ordered that CBA pay to the Commonwealth of Australia a pecuniary penalty of $150,000 in respect of contraventions of the National Credit Act responsible lending provisions relating to a credit limit increase provided by CBA to a customer. CBA offered and then made the credit limit increase after the customer informed it that he was a problem gambler and did not wish to increase his credit limit until he was able to get his gambling under control.

Facts
CBA did not formally record the fact of the Problem Gambler Notification, and it was not passed through to CBA’s credit decision systems.

On 31 October 2016, CBA sent Mr Harris a letter inviting him to apply for a further credit limit increase, to take his credit card limit up to $32,100. CBA did not consider the Problem Gambler Notification when assessing whether to make that offer.

Following the credit card limit increase, Mr Harris continued to “max out” his credit card and then sought to pay it off over time.

Justice Murphy observed:

“The conduct was not systematic, deliberate or covert. Essentially, it involved one failure to formally record the fact of the Problem Gambling Notification and therefore to pass it through to CBA’s credit decision systems. It also, though, points to an absence of proper systems. Aside from the conversation with the bank employee in which that notification was given, there is no evidence that CBA was or should have been aware prior to that conversation of Mr Harris’ gambling problem. There is no suggestion by ASIC that, other than through that Problem Gambling Notification, CBA was obliged to monitor his transactions outside of the Assessment required for the credit limit increase…

CBA has taken certain corrective measures both directed to Mr Harris and more generally.

On 22 March 2018 Mr Harris gave evidence about the credit limit increase and his situation before the Royal Commission into the Banking, Superannuation and Financial Services Industry (the Banking Royal Commission). In total CBA has forgiven $24,090 of Mr Harris’ credit card debt.

More generally CBA has introduced a series of measures intended to address issues associated the problem gambling and it has also introduced broader measures with a view to assisting customers to manage their credit card expenditure.”

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Author: David Jacobson
Principal, Bright Corporate Law
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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.