Updated September 14, 2016 14:52:53 The corporate watchdog says the Commonwealth Bank — Australia's biggest by market capitalisation — has paid four infringement penalties totalling $180,000 for breaches in providing personal overdrafts. An error caused a failure in the bank to take into consideration declared house and living expenses of some customers, substituting $0 for expenses between July 2011 and September 2015. This led to over-estimations of the customers' ability to pay overdrafts. Commonwealth Bank said about 11,000 people, or 2 per cent of personal overdraft customers were affected. Outstanding debt associated with the error is being written off, amounting to about $2.5 million. "We sincerely apologise to our customers and we regret that this error occurred," Commonwealth Bank executive general manager Clive van Horen said in a statement. "When we make a mistake that impacts our customers we will put it right to ensure our customers are not adversely affected." An internal review was conducted by the bank which identified a programming error in an automated calculator that was used to assess certain applications for personal overdrafts. "We raised this with Commonwealth Bank a couple of years ago and it seemed to us they did seem to have lax processes to assess whether those overdrafts were appropriate for customers," Consumer Action Law Centre chief executive Gerard Brody said. "[That is] whether someone is able to repay the credit provided with the overdraft without causing them financial difficulty." CBA reported the matter to the Australian Securities and Investments Commission following surveillance. ASIC said in a statement credit providers should continuously monitor their internal processes to ensure compliance with the law. Mr Brody said while most loans were lent responsibly there were some issues around unsolicited marketing of credit. "Whether that's an overdraft or a personal loan, but also practises to do with credit card lending, the banks could really improve practise to ensure that credit is provided in a way that helps people get ahead not burden them with ongoing debt," Mr Brody said. Topics: business-economics-and-finance, company-news, consumer-finance, consumer-protection, banking, australia First posted September 14, 2016 14:42:50
Australia’s Commonwealth Bank has paid a sum of AUS $180,000 for four infringement penalties for breaches made when offering personal overdrafts. The bank was fined A$120,000 in the Federal Court on Friday and ordered to pay an additional AUD $200,000 penalty after it failed to stop customers from using their cards at ATMs that were not The outstanding debt of approximately AUS $2.5 million has been written off as a result. The error was discovered by an internal review and reported to the Australian Securities and Investments Commission (ASIC).