CBA to refund another $80 million to customers

The Commonwealth Bank of Australia (CBA) will refund another approximately $80 million to customers after it failed to apply fee waivers, interest concessions and other benefits.

Around 216,000 Wealth Package customers will receive compensation, of approximately $370 each.

CBA reported this matter to ASIC under its breach reporting obligations.

Also read: CBA to refund $7.6 million to customers

For an annual fee, the Wealth Package (for some customers described as Mortgage Advantage Package) offered benefits such as interest rate discounts and fee waivers in relation to a range of products including home loans, credit cards, transaction accounts, personal loans, overdrafts and insurance.

CBA relied on staff to manually apply many of the discounts available under the Wealth Package but it was found that the exception reports, which was designed to detect when the discounts were not properly applied, was not working properly.

Also read: Westpac to offer refund on dodgy insurance

CBA discovered the breach following a customer complaint and reported it to ASIC in 2014.

CBA committed to fully investigate the cause of the breach and the impact on all eligible Wealth Package holders.

CBA also engaged Ernst & Young, an independent firm, to review and provide recommendations to improve controls, ensure its remediation process would identify all those affected, and ensure an accurate calculation of refunds.

“This was a significant breach, and shows how important it is for licensees to have robust systems in place to ensure financial products deliver the benefits that consumers have paid for,” ASIC deputy chairman Peter Kell said.

Also read: Commonwealth Bank customers without money after technical glitch

“Manual processes to apply discounts, waivers and other concessions involve inherent compliance risks. Licensees should carefully consider whether those risks are being appropriately managed, or are capable of being appropriately managed,” he said.

CBA has simplified the Wealth Package by reducing the number of options and products on offer.

These changes have not removed benefits that existing package holders were entitled to receive for existing eligible products.

Also read: $13m compensation for ANZ customers

CBA has commenced contacting affected Wealth Package holders and expected the majority of affected Wealth Package holders will be contacted before the end of December 2015, the remainder in early 2016.

The announcement comes soon after CBA announced on October 19 it would refund around 8,400 customers approximated $7.6 million after it failed to apply fee waivers and ongoing benefits to AgriAdvantage Plus package holders over a number of years.