CBA Pays A$180,000 For Lending Rule Breaches - Australian Regulator

Tom Burroughes

15 September 2016

An Australian bank has paid penalties totalling A$180,000 for breaking responsible lending laws regarding overdraft facilities.

The four notices were imposed on Commonwealth Bank of Australia, the Australian Securities and Investments Commission said in a statement yesterday.

CBA reported this matter to ASIC following an ASIC surveillance. CBA conducted an internal review which identified a programming error in the automated serviceability calculator used to assess certain applications for personal overdrafts, the financial watchdog said. As a result of the error, between July 2011 and September 2015, CBA failed to take into consideration the declared housing and living expenses of some consumers, it said.

The bank told the regulator that between July 2011 and September 2015, as a result of the error, CBA approved 9,577 consumers for overdrafts which would have otherwise been declined, and 1,152 consumers for higher overdraft limits than would have otherwise been provided.

CBA said it will write off a total of approximately A$2.5 million in personal overdraft balances.