The Commonwealth Bank is the latest victim of the royal commission, after documents revealed attempts to cover up business customer complaints about interest rates being double charged.
CBA’s Clive van Horen, general manager of retail products, admitted to the commission that a small business overdraft (SBO) negatively impacted 2,354 business banking customers after it was launched in 2013.
The problem was that the overdraft was attached to a business account, and each attracted their own interest charges. However, customers were overcharged after the rates were charged on both separately, when they should have been combined. This effectively doubled the interest rate charged to customers, from 16 per cent to more than 32 per cent.
Despite receiving multiple complaints in 2014 and 2015, CBA was heard to have dismissed the complaints.
One subsequent customer complaint to the Financial Ombudsman Service (FOS) claimed that despite money being drained from their account, leaving them in severe financial stress, a representative of the bank simply said “the bank is a business, and that is the cost of doing business with us”.
More damaging for CBA are the allegations it tried to suppress news of the problem for fear of it being identified as a “systemic” problem.
CBA was found to have only addressed one customer’s concerns when they threatened to go to the media, while Mr van Horen admitted to “poor judgement” by withholding news of the issue in the lead up to a parliamentary committee on financial services, as well as not reporting the issue as a systemic problem to ASIC until May this year.
Counsel assisting the commission Albert Dinelli suggested that CBA was, in this instance at least, “affected more by media and PR” than it was good governance.
Mr van Horen disagreed with this assessment, but did admit that bad publicity was a concern for the bank.
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Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.