Commonwealth Bank has apologised to customers and paid $180,000 in fines after a programming error caused Australia's largest bank to incorrectly approve almost 11,000 overdraft applications.
The bank has also 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.
The bank is contacting affected customers and telling them that they will either lose or have their personal overdraft cut.
"We sincerely apologise to our customers and we regret that this error occurred," Clive van Horen, executive general manager of 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."
The Australian Securities & Investments Commission said CBA has paid four fines totalling $180,000 after an internal review found the error, which led to the bank approving some overdrafts between July 2011 and September 2015 without considering the declared housing and living expenses of some consumers - 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 over-estimation of the consumer's capacity to service the overdraft facility, ASIC said.
CBA approved 9,577 consumers for overdrafts which would have otherwise been declined and 1,152 consumers for higher overdraft limits than would have been provided, in total less than two per cent of its personal overdraft customers.
The bank reported the matter to ASIC.
