ASIC has commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank of Australia (CBA), alleging that it charged monthly access fees to customers when it was not entitled to do so.

ASIC alleges that, between 1 June 2010 and 11 September 2019, CBA incorrectly charged monthly access fees to customers who were entitled to fee waivers because they met certain criteria under their contracts with the bank. Almost $55 million in fees were charged to nearly one million customers and more than 800,000 accounts.

For the period between 1 April 2015 and 11 September 2019, the period for which the Court can impose a penalty, ASIC alleges that CBA incorrectly charged monthly access fees on approximately 2.4 million occasions, totaling around $11.5 million.

ASIC alleges that CBA incorrectly charged monthly access fees to customers entitled to fee waivers due to systems and processes that were inadequate or improperly configured in 30 different ways, as well as due to manual errors made by CBA staff.

ASIC also alleges that each time CBA charged the fees or notified a customer via bank statement of the charging of each fee, it made false or misleading representations that it was contractually entitled to charge the fees when it was not.

Further, ASIC alleges that each time CBA entered into a contract with a customer to establish an account where a fee waiver may apply, it made false or misleading representations that it would have adequate systems and processes in place to provide the fee waivers, when it did not.

By engaging in the above conduct, ASIC alleges that CBA also engaged in misleading or deceptive conduct and contravened its obligation as an Australian financial services licensee to comply with financial services laws.

ASIC also alleges that CBA failed to provide financial services efficiently, honestly and fairly by:

• failing to apply monthly access fee waivers to customer accounts after it had represented it would do so;
• failing to maintain systems and processes that were capable of      meeting obligations to customers; and
• failing to undertake an appropriate review of the multiple systemic issues that contributed to the ongoing failure of its systems to apply monthly access fee waivers in accordance with the bank’s contract with its customers.

ASIC commenced this proceeding because financial institutions need to have robust compliance systems to meet their obligations to customers. Financial institutions need to put customers first, and customers should have confidence that the banks they deal with charge fees correctly.

The proceeding will be listed for a case management hearing on a date yet to be set.

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Originating Process (PDF 566 KB)

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Background

Between at least 1 June 2010 and 11 September 2019, CBA’s terms and conditions stated that CBA would charge a monthly access fee between $4 and $6. CBA’s terms and conditions also stated that a waiver would apply where a customer met specific criteria, for example, if a minimum amount was deposited into the account each month or if the customer was a student.

CBA received approximately 14,000 complaints from customers about the fee overcharging from June 2010 to May 2019. CBA first identified problems with its systems which caused the overcharging in January 2011.  CBA notified ASIC in December 2018 and lodged its first of a number of breach reports with ASIC in May 2019.

CBA has undertaken remediation for the majority of customers impacted by the incorrect fee charging. As at December 2020, CBA had paid almost $66 million in remediation to almost 1 million customers who were overcharged. There are some customers who have not been remediated, and CBA has not paid components of compensation or interest for some customers.

This matter is part of ASIC's ongoing effort to ensure banks have robust compliance systems that enable them to meet their obligations to customers. Recent action in this area includes ASIC's court action against NAB for unconscionable conduct and misrepresentations over account fees (21-031MR), ANZ’s $10 million penalty for unconscionable conduct over account fees (20-232MR), and CBA's $5 million penalty for charging fees to customers entitled to fee waivers under its AgriAdvantage Plus package (20-129MR). 

Editor’s note:

A case management hearing has been listed before Justice Derrington for 28 April 2021.

Editor’s note 2:

The case management hearing on 28 April 2021 has been re-listed before Justice Derrington for 7 May 2021.

Editor’s note 3:

On 30 April 2021, the case management hearing listed for 7 May 2021 was vacated, and the Court instead made timetabling orders on the papers with the consent of the parties. The matter has been listed for a case management hearing on 24 June 2021.

Editor's note 4:

On 22 June 2021, the case management hearing listed for 24 June 2021 was vacated, and the Court instead made timetabling orders on the papers with the consent of the parties. The matter has been listed for a case management hearing on 29 October 2021.

Editor's note 5:

The case management hearing on 29 October 2021 has been re-listed before Justice Derrington for 28 October 2021.

Editor's note 6:

On 22 October 2021, the case management hearing listed for 28 October 2021 was vacated, and the Court instead made timetabling orders on the papers with the consent of the parties. The matter has been listed for a case management hearing on 13 December 2021.

Editor's note 7:

Following a case management hearing on 13 December 2021, the Court made timetabling orders and set the matter down for a hearing on liability commencing on 4 October 2022.

Editor’s note 8:

On 9 September 2022, the Court made timetabling orders and re-listed the proceeding for hearing on liability before Justice Downes commencing on 10 October 2022.

Editor's note 9:

The liability hearing was heard by Justice Downes on 10-11 October 2022. Judgment was reserved.

Editor's note 10:

On 29 November 2022, the Federal Court dismissed ASIC’s proceeding against CBA (22-329MR).