Commonwealth Bank taken to court after charging customers fees that should have been waived

The corporate regulator has taken Commonwealth Bank to court for charging monthly access fees to customers who were entitled to fee waivers.

Key points:

• ASIC alleges the bank wrongly took more than $50m in fees
• CBA has apologised to customers and paid over $60 million in remediation
• However, the bank is defending itself in court

The Australian Securities and Investments Commission (ASIC) alleges CBA took roughly $55 million in fees from nearly 1 million customers over nine years.

It has started civil penalty proceedings in the Federal Court.

Between June 1 2010 and September 11 2019, CBA's terms and conditions stated that it would charge a monthly access fee of between $4 and $6.

But its terms and conditions also stated a waiver would apply where a customer met specific criteria, for example, if a minimum amount was deposited into the account each month or if the customer was a pensioner or a full-time tertiary student.

CBA received roughly 14,000 complaints from customers who were charged fees between 2010 and 2019.

Problem began in 2011

CBA first identified problems with its systems which caused the overcharging in January 2011.

It notified ASIC in December 2018 and lodged the first of a series of breach reports with ASIC in May 2019.

It has remediated customers impacted by the incorrect fee charging, paying more than $60 million (including interest), and says the remediation process is now complete.

However, on Thursday ASIC announced it had started legal proceedings against CBA for making false and misleading representations, for failing to provide financial services efficiently, honestly and fairly, and for engaging in misleading and deceptive conduct.

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

ASIC says customers must have confidence in banks

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

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

CBA accepts the errors should not have occurred, but it says it will be defending itself in court.

"ASIC does not allege that any of the contraventions were deliberate," a CBA spokesperson said in a statement.

"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.

"CBA apologises to all customers impacted by these issues."

CBA completes divestment of insurance arm

The news of the court case came as CBA announced the completion of its divestment from its troubled life insurance business CommInsure.

CBA told the stock exchange on Thursday that the divestment of CommInsure Life had been completed via a statutory asset transfer to AIA Australia Limited.

CBA said it had received approximately $2.4 billion in proceeds for the divestment, including the receipt of the final instalment of roughly $100 million.

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