ASIC charges CBA for a total of $11.5 million in wrongful fees

Rick Steves

The regulator found almost $55 million in fees were charged to nearly one million customers and more than 800,000 accounts, between 1 June 2010 and 11 September 2019. The Court, however, can only impose a penalty for the period between 1 April 2015 and 11 September 2019, which resulted in $11.5 million of wrongful fees.

ASIC has sued the Commonwealth Bank of Australia (CBA) for charging monthly access fees to customers when it was not entitled to do so, the regulator alleges.

Civil penalty proceedings in the Federal Court against CBA will be listed for a case management hearing on a date yet to be set.

The Australian financial watchdog accuses CBA of incorrectly charging monthly access fees to customers who were entitled to fee waivers because they met certain criteria under their contracts with the bank.

The regulator found almost $55 million in fees were charged to nearly one million customers and more than 800,000 accounts, between 1 June 2010 and 11 September 2019.

The Court, however, can only impose a penalty for the period between 1 April 2015 and 11 September 2019. CBA’s misleading affairs amounted to approximately 2.4 million occasions, totaling around $11.5 million, ASIC argues.

CBA’s inappropriate monthly access fees were caused by systems and processes that were inadequate or improperly configured in 30 different ways, as well as due to manual errors made by CBA staff, according to the regulator, which also alleges that the bank made false or misleading representations that it would have adequate systems and processes in place to provide the fee waivers when it did not.

In sum, CBA’s failure to provide efficient, honest, and fair services were due to failures to provide fee waivers included in its contract with customers, to maintain compliant systems and processes, to undertake reviews of the systemic issues.

ASIC has recently announced a ten-year ban for Shlomo Yoshai, the chief executive officer, responsible manager and sole director of Forex Capital Trading. His disregard for compliance was so serious it justified the ban from providing financial services, according to the regulator.

Forex CT’s breaches of the Corporations Act included “failing to do all things necessary to ensure the financial services
are provided efficiently, honestly and fairly” and conflicts of interest.

“Forex CT’s trading floor culture […] had been likened by former account managers to The Wolf of Wall Street, where a bell or a gong was rung when clients deposited funds of certain amounts into their trading accounts and account managers could participate in incentive ‘games’ such as ‘wheel of fortune’, roulette tables and dice games to win cash if certain client deposit targets were met”, the statement said.

The broker’s commission structure even entitled team leaders and account managers to a percentage of client “net deposits” (deposits less withdrawals).

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