Australia’s financial services watchdog on Tuesday filed a civil lawsuit against the country’s largest bank for charging more than 2,200 customers an interest rate that was higher than advertised over a seven-year period.
The Australian Securities and Investments Commission (ASIC) alleged that a systems error at the Commonwealth Bank of Australia caused the bank to charge 34% interest on business overdraft accounts between December 2011 and March 2018, more than double the advertised rate of between 14.55% and 16%.
The difference caused the bank to gain more than $2.9 million, ASIC said in its filing.
Customers continued to face higher rates than stated even after a complaint in 2013 prompted the bank to try (unsuccessfully) to fix the overcharging error, the regulator continued. The average customer lost around $1,500 due to the error, while one customer was overcharged by $17,522.
ASIC asked the Federal Court to find that CBA made false or misleading statements in breach of federal laws, and that the bank broke its obligations under the Corporations Act regarding financial services laws. For these, the regulator seeks a fine “as the court determines to be appropriate” and an order forcing CBA to publicly acknowledge any such fine and determination.
“CBA has cooperated fully with ASIC’s investigation and does not intend to defend the proceedings,” the bank said in a statement on Tuesday, adding that the problems behind the error had been dealt with and the 2,269 affected customers had been refunded a total of $3.74 million.
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The suit stems from a case study from a Royal Commission into the Australian banking industry two years ago. ASIC said in its statement that, between December 2014 and March 2018, CBA breached financial services laws 12,119 times.
