In ASIC v Commonwealth Bank of Australia  FCA 790 (5 June 2020), the Federal Court of Australia (“Federal Court”) has ruled that Commonwealth Bank of Australia (“CBA”) pay a $5 million fine for charging excessive fees to 8,659 farmers who took part in the bank’s flawed AgriAdvantage Plus Package scheme.
The issue ofwas raised in the hearing of the which also covered farming issues. In this case, CBA customers came out behind on 131,542 occasions when they used the bank's AgriAdvantage Plus Package (“AA+ Package”) that was meant to give customers fee waivers, interest rate discounts and bonus interest on savings in exchange for their payment of “package fees”. ASIC launched the action in March 2020.
The AA+ Package was sold from May 2005 to December 2015. According to ABC News the “manual nature of the bank's systems was compounded by it having no systems or processes in place to check whether customers were receiving benefits”.
In an ASIC Media Release commenting on the case, it is reported that ASIC (the regulator) alleged and CBA admitted, that:
Effectively, the bank “failed to ensure it could fulfil the promises made to customers on the AgriAdvantage packages over a protracted period”.
The Court found that CBA had breached provisions of the Australian Securities and Investments Commission Act 2001 (Cth) and Corporations Act 2001 (Cth) through the failures of their AgriAdvantage Plus Package. The Court also ordered CBA to publish a Corrective Notice in the form determined by the Court.
In his judgment, Beach J said at [para 8]:“… its contraventions arose out of its failure to establish and maintain systems and processes to ensure that it could provide the AA+ Package benefits in accordance with the AA+ Package terms and conditions. In my view, this should be seen as a specific systems deficiency rather than a broader deficit in CBA’s corporate culture …”
His Honour further noted at [para 9]:
His Honour also said he accepted that “a penalty of $5 million may be seen to be on the light side”, however, he placed it in the context that the bank took “early self-generated steps” to pay back customers and reported the issue to ASIC in 2014.
Beach J said the aim of generally deterring future law-breaking was served by the “$5 million penalty, my declarations and any consequent reputational damage”.
ASIC Deputy Chair Daniel Crennan QC said in a statement:
According to ABC News, CBA issued a statement apologising to customers:
The CBA did not oppose the court action and had paid back the bulk of the money before the hearing began.
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Australian Securities and Investments Commission v Commonwealth Bank of Australia  FCA 790 (5 June 2020)
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