CBA fined $5m for agribusiness account breaches

CBA said it did not defend the proceedings and ‘accepts the penalty as appropriate in this case’.

CBA said it did not defend the proceedings and “accepts the penalty as appropriate in this case”. Picture: Bloomberg

Commonwealth Bank has been slapped with a $5m fine in the Federal Court after it found the country’s biggest retail bank failed to provide customers the benefits of an AgriAdvantage Plus Package they were sold by the bank.

The scheme, sold to farmers between 2005 and 2015, entitled customers to fee waivers, interest rate discounts and bonus interest on savings, in exchange for the payment of package fees on 22 CBA products.

Customers paid $300 as an annual fee to access the package between 2005 and 2010, while after November 2010 they were required to pay a one-off establishment fee of $1000 or 0.25 per cent of total borrowing plus the $300 fee.

CBA stopped selling the package in 2015, but reported the issues with its package in 2014 to ASIC, which then engaged with CBA in relation to customer remediation.

The fine comes after CBA paid out approximately $8m in refunds as part of a clean-up operation called Project Combine. On average, customers were repaid $912.

Justice Beach found CBA breached its obligation to do all things necessary to ensure that the financial services covered by its AFSL were provided efficiently, honestly and fairly.

Friday’s judgment was the second finalised case arising from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Justice Beach found CBA had failed to establish and maintain systems and processes to ensure that it could provide customers the benefits that the AgriAdvantage Plus Package entitled them to.

“Although ASIC has sought only penalties and declarations as to CBA’s contraventions during the penalty period, the seriousness of those contraventions is to be viewed in the context of CBA’s failings for the broader period of over 10 years,” said Justice Beach in his judgment.

CBA said it did not defend the proceedings and “accepts the penalty as appropriate in this case”.

“We apologise to those customers who at the time didn’t receive their AgriAdvantage Plus package benefits or were overcharged fees,” a spokesman said.

“We have sent refunds of approximately $8m (including interest) and there were 8659 customers impacted. Failures of this sort are unacceptable.”

ASIC deputy chair Daniel Crennan QC said they considered CBA’s conduct in the AgriAdvantage Plus package matter was “the result of inadequate systems and processes”.

“Because of its conduct, CBA failed to deliver its AgriAdvantage package efficiently, honestly and fairly as it was obliged to do under s912A of the Corporations Act,” he said.

“As recognised by Justice Beach in his judgment, CBA took steps to address the harm that the conduct caused and, importantly, made admissions as to its contraventions of the law at the first possible opportunity in the litigation.”

“ASIC’s expectation of the entities that it regulates is that, in appropriate circumstances, when ASIC issues proceedings against them, they ought to make admissions and engage in the penalties process at the earliest possible opportunity.”