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ASIC sues CBA over monthly fees

The corporate regulator has commenced civil proceedings against Commonwealth Bank over allegations it wrongly charged monthly fees to customers over a nine-year period.

ASIC alleges CBA incorrectly charged $55 million in monthly access fees to nearly one million customers who met criteria that entitled them to fee waivers throughout 1 June 2010 and 11 September 2019.

The court can impose a penalty for the period between 1 April 2015 and 11 September 2019 and ASIC alleges CBA incorrectly charged monthly access fees on approximately 2.4 million occasions, totaling around $11.5 million.

The alleged incorrect fee charges occurred due to systems and processes that were inadequate or improperly configured in 30 different ways, as well as manual errors made by staff.

The corporate regulator alleges CBA made false representations that it was contractually entitled to charge the fees when it was not.

Furthermore, it is alleged the bank told new customers eligible for the fee waiver that it had systems in place to provide the waiver when it didn't.

CBA said it acknowledges the proceedings and accepts the errors should not have occurred but will defend the matter.

"ASIC does not allege that any of the contraventions were deliberate. CBA has co-operated fully with ASIC during its investigation, however it does not accept the way that the alleged contraventions have been formulated in the proceedings and therefore will defend the matter," the bank said in a statement.

The bank received around 14,000 complaints from customers about the fees overcharging from June 2010 to May 2019 and first identified problems with its systems which caused the overcharging in January 2011.

It was only in December 2018 that CBA notified ASIC and lodged its first breach reports in May 2019.

"ASIC commenced this proceeding because financial institutions need to have robust compliance systems to meet their obligations to customers," the regulator said.

"Financial institutions need to put customers first, and customers should have confidence that the banks they deal with charge fees correctly."

CBA paid $66 million in remediation to most of the affected customers by December 2020. However, there are still some customers who have yet to be remediated. Of the total remediation payments approximately 90% related to two fee waiver issues that were identified in 2017 and 2019.

The penalty proceedings come after CBA was forced to pay a $5 million penalty last year for charging fees to customers entitled to fee waivers under its AgriAdvantage Plus package.

NAB was also sued by ASIC in February over the incorrect charging of fees and ANZ was forced to pay $10 million in October for charging fees to customers in relation to periodic payments.

Read more: ASICCommonwealth Bank