The Federal Court of Australia has slapped CBA with a $7m fine as penalty for their overcharging case with the Australian Securities and Investments Commission (ASIC).
The proceedings against CBA, which commenced in November, looked into the bank's misleading representations and conduct. The bank was found to have overcharged interest on small business loans from 2014 to 2018, with the total overcharged value reaching over $2.2m.
CBA said that this was due to a system error — over 1,510 of its clients were charged higher interest rate on their overdraft accounts. While CBA admitted to the allegations, it told the court that it had "acted expeditiously" to remedy the error. However, this response, along with its submission of a $4m to $5m penalty, was rejected by the court.
ASIC Commissioner Sean Hughes said CBA's delay in remediating customers 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," he said.
Hughes furthered: "Financial services institutions need to have appropriate systems, governance and controls in place to ensure they deliver on promises made to their customers."
The bank has so far remediated $3.74 million to the customers impacted in this case.
"CBA is now making investments in its systems as a matter of priority. All financial services institutions should make similar commitments to rebuild trust in our financial system and to avoid further failures," Hughes said.