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MIsleading and Deceptive Conduct

Friday 9 April 2021

The Federal Court of Australia has ordered CBA to pay $ 7 million for misleading representations and conduct. 
The allegations made by the securities regulator Australian Securities and Investment Commission (ASIC):

  • provided customers with terms and conditions for certain credit facilities that stated an interest rate to be charged or that had been charged (in most cases, 16% per annum)
  • sent periodic account statements to customers referencing the rate at which interest rate was being charged (in most cases, 16% per annum), and due to a systems error, charged more than 1,510 customers a different, higher interest rate on their overdraft accounts (in most cases approximately 34% per annum).
 “CBA’s delay in remediating customers following this error 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,” ASIC Commissioner Sean Hughes said in an official release at the beginning of this month. 
This comes after the securities regulator commenced proceedings in December 2020. 
‘As recognised by Justice Lee, CBA made important admissions as to its many contraventions of the law. 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.’
Consumer and Credit Insurance
ASIC has also just commenced proceedings against Westpac for misleading and deceptive conduct for the ‘mis-selling’ of consumer credit insurance. 
According to their official release, they allege that from April to July in 2015: 

  • made false or misleading representations that customers had agreed to acquire, were liable to pay for and that Westpac had a right to charge for, CCI.
  • asserted a right to payment for the CCI premiums which customers were not liable to pay.
  • failed to ensure that its financial services were provided efficiently, honestly, and fairly when it supplied CCI to customers who had not agreed to acquire CCI and debited premiums from those customers’ accounts; and
  • failed to comply with financial services laws, being the ASIC Act.
ASIC Deputy Chair Karen Chester said in the release this week, “ASIC’s deep dive investigations in late 2018 and into 2019 found lenders had disappointingly not changed policies and conduct to stem harms from the design and sale of CCI. As a result, we’ve commenced civil proceedings against Westpac.”