CBA’s conduct in making misleading representations and accepting payment where there were reasonable grounds to believe services would not be provided.
On 5 June 2020, Beach J of the Federal Court of Australia (in proceeding VID 180 of 2020) ordered CBA to pay a pecuniary penalty of $5 million to the Commonwealth for its conduct in relation to the AgriAdvantage Plus product (offered by CBA between May 2005 and November 2015) (AA+ Package).
The Court ordered CBA to pay the pecuniary penalty because it was found to have, between 16 March 2014 and 31 December 2015 (Penalty Period):
(a) made false or misleading representations to customers that CBA had adequate systems and processes in place to be able to provide customers the benefits offered under the AA+ Package and CBA would apply those benefits in accordance with the terms and conditions of the AA+ Package; and
(b) accepted payments from customers in exchange for CBA applying the benefits under the AA+ Package when there were reasonable grounds for believing that CBA would not be able to provide the benefits under the AA+ Package.
The Court found that, during the total period over which the AA+ Package was offered (May 2005 to 31 December 2015) (Relevant Period), a total of 8,659 customers were harmed by CBA’s conduct on 131,542 occasions, through incorrectly charged fees and interest on loans, underpaid interest on savings, and as a result of mischarging annual fees for the AA+ Package. CBA remediated the full amount of $8,087,267.23 (which included interest for the time that had passed) to its affected customers.
During the Penalty Period, CBA accepted payments of AA+ Package Fees from 6,953 customers for the provision of the AA+ Package Benefits. The total amount of Accepted Payments within the Penalty Period was $1,704,650. Any customers harmed by this conduct were remediated as part of the $8,087,267.23 payment for the Relevant Period.
CBA co-operated with ASIC during its investigations and has remediated those customers affected by the conduct described above.
This Corrective Notice has been paid for by CBA pursuant to the Court’s orders.