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Wednesday 7 March 2012

12-40MR ASIC accepts enforceable undertaking from Commonwealth Bank

ASIC today announced it has accepted a court enforceable undertaking (EU) from Commonwealth Bank of Australia (CBA) following concerns that a message sent to its internet banking customers was misleading.

The message sought customers’ consent to receive credit card limit increase invitations.

New laws commencing on 1 July 2012 prohibit card issuers from sending unsolicited credit limit increase invitations to their customers unless the customer has consented.

On 12 and 13 December 2011, CBA sent messages via its internet banking platform to customers notifying them of the changes to the law regarding credit limit increase invitations. CBA requested that customers provide their consent to continue to receive credit limit increase invitations. Approximately 96,000 customers provided their consent.

ASIC formed the view that the messages were misleading as they:

  • suggested that if CBA’s customers did not complete the electronic consent in response to the message they would lose the chance to receive credit limit increase offers
  • suggested that if they did not consent, customers would miss out on opportunities to access extra funds should they need them, and
  • created the impression that customers needed to act urgently, which may have led customers to respond without properly considering their options.

In fact, under the changes to the law, customers can provide or withdraw their consent at any time. Further, regardless of whether they have consented to being sent credit limit increase invitations, customers can request a credit limit increase from their financial institution at any time. Nothing in the new legislation changes this.

In addition to concerns about the messages being misleading, ASIC was also concerned that CBA's approach to obtaining the consents may not have satisfied the requirements of the legislation in order to obtain valid consents.

CBA immediately withdrew the message when ASIC raised its concerns.

ASIC Commissioner Peter Kell said: ‘The new law is designed to assist consumers to actively choose how to manage their credit limit, rather than being prompted to increase their limit by unsolicited letters from their bank or credit provider.

‘This enforceable undertaking demonstrates that ASIC will act quickly to ensure that consumers are in a position to make an informed decision under the new law and to prevent the risk of consumer decision making being compromised by misleading impressions of urgency or of a loss of rights.’

Under the EU CBA has agreed to:

  • not rely on the consents obtained from customers on 12 and 13 December 2011, and
  • contact each customer who consented correcting any misleading impression and informing them of their rights.

ASIC acknowledges the cooperative approach taken by the CBA in relation to this matter.


From 1 July 2012 changes to the National Consumer Credit Protection Act 2009 mean that credit providers cannot send invitations to customers unless the customer has previously provided their consent.

When a customer applies for additional credit (irrespective of whether they are responding to a credit limit increase invitation) the financial institution must ensure that it satisfies its responsible lending obligations under the National Credit Code.

Download the enforceable undertaking

Last updated: 07/03/2012 12:00