ASIC is seeking pecuniary damages from Commonwealth Bank for overcharging interest on loans made to business borrowers between 2011 and 2018.
The regulator on Tuesday launched proceedings against the bank in the Federal Court alleging that 2200 overdraft accountholders were stung with an extra A$3 million in interest charges.
ASIC is seeking civil damages for alleged misleading and deceptive conduct by the bank relating to its failed attempts to correct the overcharging problem.
Despite complaints from customers in 2013, the overcharging issue persisted for another five years.
Evidence relating to the case was initially presented to the Hayne Royal Commission in 2018.
In a statement filed to the ASX, CBA said that it had completed a program to remediate customers affected by the overcharging “errors”.
“The matter concerns CBA’s conduct in relation to an overcharging error with two products: Simple Business Overdrafts and Business Overdrafts between December 2011 and March 2018,” the bank told the ASX.
“The problems that caused the error have been addressed and 2,269 customers have been sent refunds.
“The combined total of refunds sent to customers was $3.74 million, and the remediation program has now concluded.”
While CBA said it would not be defending the claims made by ASIC in its court filing, it is unclear whether the bank will seek to contest the level of pecuniary damages the regulator might quantify in the hearings.
If ASIC is successful in securing an award for damages from the court, the money is likely to be remitted to federal government rather than the thousands of business customers who were stung by the bank.
The CBA’s overcharging of interest on overdrafts is the twelfth industry case study examined by the Hayne Royal Commission that has resulted in ASIC civil claims.
The dozen cases are in addition to another 13 matters that were specifically referred to the regulator by Commissioner Kenneth Hayne for possible legal action.
So far, the most significant outcome was achieved in September when the Federal Court ordered two trustee firms owned by the National Australia Bank to pay a combined penalty of $57.5 million for levying fees on customers even though they never received financial advice.
ASIC has also brought four other cases in the Federal Court against CBA-owned businesses in relation to matters highlighted by the royal commission.
The regulator is suing the bank’s CFSIL subsidiary for directing customers to stay in high-fee superannuation products rather than transition to cheaper MySuper products.
ASIC is alleging that CFSIL communicated superannuation information in a misleading or deceptive manner that could have influenced the product selections of more than 8600 customers.
In a separate court action, ASIC alleges that CBA and CFSIL also engaged in conflicted remuneration practices that are banned under the Corporations Act.