The ghosts of the finance industry Royal Commission come to haunt the big bank, as the corporate watchdog starts legal action.
The post CBA (ASX:CBA) hauled to court over rip-off accusations appeared first on Motley Fool Australia. –
Commonwealth Bank of Australia (ASX: CBA) is facing court action over overcharging allegations first aired at the finance industry Royal Commission.
Australian Securities and Investments Commission (ASIC) has started a civil case against CBA for charging an overdraft interest rate “substantially higher” to what its business customers were told.
Over more than 6 years starting from December 2011, ASIC alleges the bank told customers an overdraft rate of 16% per annum, while actually slugging them 34%.
The lower rate continued to be published on periodic statements, the watchdog claims.
The bank tried to manually fix the overcharging error after a complaint was received in 2013.
However, the fix was unsuccessful and clients continued to be overcharged until March 2018, according to ASIC.
In total the overcharged interest amounted to more than $2.9 million.
The Motley Fool has contacted CBA for comment.
ASIC is seeking penalties and remediation orders from the court for multiple breaches of the ASIC and Corporations Acts.
The Motley Fool understands CBA has already created a compensation scheme that’s delivered $4 million to victims.
Commonwealth Bank shares went on an absolute tear in November, gaining 24% in value. It’s at $78.89 in early Tuesday trade.
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.