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ASIC proceedings against CBA dismissed by Federal Court
The Federal Court has dismissed proceedings brought by the corporate regulator alleging that Commonwealth Bank of Australia had engaged in misleading or deceptive conduct over monthly access fees.
Jerome Doraisamy
In a judgment handed down earlier today (Tuesday, 29 November), Justice Kylie Downes dismissed the claims for relief sought by the Australian Securities and Investments Commission (ASIC) against Commonwealth Bank of Australia, alleging that the banking giant had engaged in misleading or deceptive conduct, made false or misleading representations and contravened its obligations as an Australian financial services licensee by incorrectly charging monthly access fees to customers.
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The regulator had alleged that, between 1 June 2010 and 11 September 2019, CBA had incorrectly charged monthly access fees to customers who were entitled to fee waivers because they met certain criteria under their contracts with the bank. Almost $55 million in fees were charged to nearly 1 million customers and more than 800,000 accounts, ASIC said.
Downes J found that, in relation to fees incorrectly charged and recorded on a customer’s bank statement, the only representation by CBA was that a fee of a particular amount had been charged on or around the nominated date, and that the customer should check whether the entry was correct and notify CBA in the event of any error.
CBA’s terms and conditions, Her Honour outlined, contained words to the effect that “sometimes we can get things wrong, and when this happens, we’re determined to make them right again”.
Moreover, Her Honour found that allegations that CBA’s systems and processes were not adequate to ensure that it could and would provide the applicable fee waiver when it entered into a contract with a customer to establish an account, were “vague and ambiguous”.
“ASIC submits that the ordinary or reasonable customer would know from the notation on the customer account statement that CBA had charged a fee. So much may be accepted. ASIC then submits that, with that knowledge, a reasonable understanding of such a customer would be that a bank does not charge a fee unless it is entitled to do so. It submits that the alternative is that it is reasonable to expect a bank to take a customer’s money with no entitlement,” Downes J considered.
“However, this ignores another alternative, being that a reasonable understanding of the ordinary and reasonable customer is that the fee has been or, at least, might have been charged in error.”
“The ordinary and reasonable customer understands that a customer account statement is sent to customers so that they may acquaint themselves with those transactions and satisfy themselves that no disputed transactions have occurred, either by error of the bank, or mistake or malfeasance by third parties,” Her Honour said.
“ASIC failed to establish that CBA breached its obligation to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly” in contravention of the Corporations Act, Downes J deduced.
Speaking about the ruling, ASIC deputy chair Sarah Court said that the corporate regulator had pursued the case because it believed that CBA “did not have robust compliance systems to ensure customers were being correctly charged”.
“ASIC will carefully consider the judgement and continue to work to ensure large financial institutions charge fees correctly and put their customers first,” she stressed.
The case citation is Australian Securities and Investments Commission v Commonwealth Bank of Australia [2022] FCA 1422.
