Commonwealth Bank set to refund overcharged customers

The Commonwealth Bank has admitted that it has overcharged some of its customers around $80 million in fees and interest.

Commonwealth Bank set to refund overcharged customers

Around 210,000 of its home loan customers with a Mortgage Advantage or Wealth Package account are affected.

They'll be returned an avergae of $370.

But there are concerns other banks may need to take action too.

Paul Fratto has a home loan with the Commonwealth Bank and noticed a refund in his savings account.

 

"I didn't know what it was for. That then prompted me to contact the Commonwealth Bank customer service line and after speaking to three different people, I spoke to someone in the home loans area and they advised it was for a refund that I had on my Wealth Package that I have on my home loan account."

 

CommBank admitted some home loan customers didn't receive the discounts they were entitled to, in some cases since 2008, meaning customers paid unnecessary fees and interest.

Gerard Brody, the Chief Executive of the Consumer Action Law Centre, says the bank has real questions to answer.

 

"Obviously it is providing very complex products to its customers, this was in relation to a mortgage product that had complex discount arrangements across other products, transaction banking, credit cards and insurance and I think it got too complex for Commonwealth Bank."

 

Bank staff were required to manually apply the discounts but in many cases, that didn't happen.

Gerard Brody adds that it may not be an isolated case.

 

"I think it is likely other banks may have similar problems in terms of complex problems meaning that promised discounts or promised benefits don't eventuate for customers."

 

In a statement, CommBank says an independent expert was engaged from the outset to review and validate the refund approach.

It says the bank has taken steps to address the root causes of the error, including changes to controls, systems and processes.

The banking monitor, the Australian Securities and Investments Commission, has called it a significant breach.

Meanwhile customer Paul Fratto now has other concerns.

 

"It kind of makes me question in the long run, what else am I being overcharged for and where else is money being taken out of my account that I'm not really familiar with? So I guess from the Commonwealth Bank's point of view they need to be more stringent with their processes to make sure people aren't being overcharged in the long run."

 

Consumer advocate Gerard Brody says the banks need to improve their game.

 

"I think it is impossible for a consumer to be across all these different complexities in banking products. The obligations do need to be on the banks themselves to ensure their products are fair and suitable for consumers' needs."

 

The Commonwealth Bank has now identified all customers who are due a refund plus interest and is in the process of contacting them.

It says almost all will be repaid in full by the end of the year.