The Australian Securities & Investments Commission (ASIC) has filed a civil lawsuit against the Commonwealth Bank of Australia (CBA) for collecting higher interest rates from customers.
The regulator has begun the litigations against CBA in the Federal Court as the lender was charging higher interest on business overdrafts than what it promised to customers.
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This happened over a seven-year period from 29 December 2011 to 31 March 2018.
During this period, CBA offered a 16% per annum rate of interest on most of the credit facilities it offered to its customers.
The bank sent account statement periodically, mentioning the rate of interest being charged.
However, due to a system error, over 2,200 customers were charged nearly 34% per annum on their overdraft accounts.
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By GlobalDataAs a result, the total overcharged interest amounted to over A$2.9m ($2.13m).
In 2013, a complaint was made to the bank and CBA allegedly tried fixing the system error manually, but it was unsuccessful, and customers continued paying higher interests.
CBA, through its remediation programme, has paid A$4m to impacted customers as a compensation.
ASIC alleged that “CBA engaged in conduct that contravened financial services laws”, from 1 December 2014 to 31 March 2018, on 12,119 occasions.
ASIC is looking to penalise CBA while seeking other orders against CBA in the court hearing.
The Federal Court is yet to schedule the date for the first case management hearing.
In the past, ASIC already fined CBA $5m for failures in its AgriAdvantage Plus Package, which included overcharged interest on loans and fees.
In September 2020, Westpac was fined A$1.3bn ($916m) for breaching anti-money laundering laws and failing to stop child exploitation payments.
