The Commonwealth Bank of Australia (CBA) has been hit with a A$7m (($5.36m) fine for charging a higher rate of interest from its customers on business overdraft accounts.
The Federal Court of Australia found 12,119 occasions when the bank charged a higher interest rate than what it advised to customers.
The misconduct was said to be the result of a systems error.
As a result of the error, over 1,510 customers were charged around 34% per annum instead of the 16% rate that customers were said to be charged in most cases.
CBA admitted the error, submitting that an appropriate fine for the matter would be between A$4m and A$5m. ASIC argued that the appropriate fine should be $7m.
Issuing the order, Justice Lee said that the matter involved significant false and misleading representations.
Lee said that the conduct of the bank was serious, and also dismission the submission that CBA had acted quickly to address the issue.
The total overcharged interest was over A$2.2m, and the bank remediated A$3.74m to the customers affected.
ASIC commissioner Sean Hughes said: “When CBA failed to resolve this error after it was identified, customers were overcharged more than $2 million in interest.
“CBA’s delay in remediating customers following this error was an aggravating factor in the Court’s determination of the penalty. When financial institutions discover overcharging, they must take immediate action to remediate impacted consumers.
“As recognised by Justice Lee, CBA made important admissions as to its many contraventions of the law. CBA is now making investments in its systems as a matter of priority.”
Recent CBA developments
Last month, CBA said that it is using a new purpose-built data model solution to contact customers affected by natural disasters. The solution uses custom-built algorithms to monitor official emergency sources and weather alert systems in real-time.
The bank was recently also in the news for foraying into the buy now, pay later (BNPL) space.