Commbank writes off $2.5m worth of overdrafts
THE Commonwealth Bank, has paid $180,000 in fines and written off $2.5 million after a programming error caused it to incorrectly approve almost 11,000 overdraft applications.
The Australian Securities & Investments Commission said the bank, Australia’s largest, has paid the fines and written off $2.5 million in overdraft account balances after an internal review found the error in an automated calculator used to assess applications for personal overdrafts.
As a result, the bank approved overdrafts without considering the declared housing and living expenses of some consumers between July 2011 and September 2015 — a breach of responsible lending laws.
CBA’s serviceability calculator substituted $0 housing expenses, and living expenses based on a benchmark which in some instances was substantially less than the living expenses declared by the consumer in their application.
This led to an overestimation of the consumer’s capacity to service the overdraft facility, ASIC said on Wednesday.
The Commonwealth approved 9577 consumers for overdrafts which would have otherwise been declined and 1,152 consumers for higher overdraft limits than would have been provided.
The bank, which reported the matter to ASIC, said in a statement that affected customers were being contacted to let them know of the error, and the need to remove or reduce their personal overdraft.
“We have also advised customers that any outstanding debt associated with this error is being written off … and that their credit ratings have not been impacted as a result of this mistake,” the statement said.
“We sincerely apologise to our customers and we regret that this error occurred,” Clive van Horen, Executive General Manager, Retail Products and Strategy said.
“When we make a mistake that impacts our customers we will put it right to ensure our customers are not adversely affected.
“Once we identified this error, we informed the Australian Securities & Investments Commission and have been working with the regulator as we correct this issue for affected customers. We continue to review our systems and processes to ensure we are delivering the best possible customer experience.”