The Australian Securities & Investments Commission (ASIC) has hit Commonwealth Bank of Australia (CBA) with a fine of $180,000 for by for violating responsible lending laws.
The lender has also been forced to write off A$2.5m in loan balances after a system glitch led to incorrect assessments in personal overdraft accounts applications.
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As a result of the error, between July 2011 and September 2015, CBA failed to take into consideration the declared housing and living expenses of some consumers, the regulator said in its press note.
“As a result, this led to an over-estimation of the consumer's capacity to service the overdraft facility,” the regulator added.
A total of 9,577 consumers were approved for overdrafts which would have otherwise been declined; and 1,152 more consumers were given higher overdraft limits.
CBA admitted the mistake after an ASIC surveillance.
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By GlobalDataASIC deputy chairman Peter Kell said: “Credit licensees should continuously monitor their internal processes to ensure compliance with the law. This is especially the case with automated decision-making systems where ongoing monitoring is needed to ensure that information is correctly inputted into systems.”
