ASIC sues CBA over monthly access fees

The Australian Securities and Investments Commission (ASIC) is suing the Commonwealth Bank of Australia (CBA) for misleading conduct over monthly access fees.

ASIC commenced civil penalty proceedings in the Federal court, alleging CBA charged monthly access fees to customers when it was not entitled to do so.

Almost $55 million in fees was charged to nearly one million customers and more than 800,000 accounts.

It was alleged 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.

Approximately 14,000 complaints were made from customers about the fee overcharging from June 2010 to May 2019.

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Between 1 April, 2015, and 11 September, 2019, the period for which the Court was allowed to impose a penalty, ASIC alleged that CBA incorrectly charged monthly access fees on approximately 2.4 million occasions, totalling around $11.5 million.

ASIC alleged 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 alleged 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 alleged 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 that conduct, ASIC alleged that CBA also engaged in misleading or deceptive conduct and contravened its obligation as an Australian financial services licensee (AFSL) to comply with financial services laws.

ASIC also alleged that CBA failed to provide financial services efficiently, honestly and fairly as it:

• Failed to apply monthly access fee waivers to customer accounts after it had represented it would do so;
• Failed to maintain systems and processes that were capable of meeting obligations to customers; and
• Failed 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.

The proceeding would be listed for a case management hearing on a date yet to be set.

CBA said the proceedings related to errors by the bank where monthly account fee waivers were not applied to accounts for certain customers and accepted these errors should not have occurred and had provided several breach reports to ASIC in relation to these issues.

The bank said ASIC did not allege that any of the contraventions were deliberate and that it had co-operated fully with ASIC during its investigation.

However, it did not accept the way that the alleged contraventions had been formulated in the proceedings and therefore was expected to defend the matter.

"CBA apologises to all customers impacted by these issues," the bank said. "Remediation payments of $64.2 million, including interest, have been sent to customers. Of the total remediation payments approximately 90% related to two fee waiver issues that were identified in 2017 and 2019."

The remediation of customers affected by the issues in these proceedings has been completed. CBA continues to invest in strengthening its systems and procedures.