ASIC takes CBA to court over alleged overcharging of business overdraft interest rates
ASIC has today commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank of Australia (CBA) for charging a rate of interest on business overdraft accounts substantially higher than what its customers were advised.
ASIC alleges from 29 December 2011 to 31 March 2018, CBA:
- provided customers with terms and conditions for certain credit facilities that stated an interest rate to be charged or that had been charged (in most cases, 16% per annum);
- sent periodic account statements to customers referencing the rate at which interest rate was being charged (in most cases, 16% per annum); and
- due to a systems error, charged more than 2,200 customers a different, higher interest rate on their overdraft accounts (in most cases approximately 34% per annum).
The total overcharged interest exceeded $2.9 million.
ASIC alleges that CBA attempted to manually fix the overcharging error after a complaint was made to the bank in 2013. The manual fixes were unsuccessful, and customers continued to be overcharged. ASIC alleges that from 1 December 2014 to 31 March 2018, being within the six-year limitation period, CBA engaged in conduct that contravened financial services laws. Specifically, that on 12,119 occasions, CBA:
- made a misleading representation in contravention of s12DB(1)(g) of the ASIC Act;
- engaged in misleading or deceptive conduct, or conduct that was likely to mislead or deceive, in contravention of s12DA(1) of the ASIC Act; and
- failed to comply with its obligation to comply with financial services laws in contravention of s912A(1)(c) of the Corporations Act.
ASIC is seeking declarations, pecuniary penalties and other orders against CBA.
The date for the first case management hearing is yet to be scheduled.
ASIC previously obtained a $5 million penalty against CBA for failures of their AgriAdvantage Plus Package for failures including overcharged interest on loans and fees.
