Australia's corporate regulator filed on Tuesday a civil lawsuit against Commonwealth Bank of Australia for charging customers an interest rate higher than advised over a seven-year period.
A systems error led Australia's biggest bank to overcharge interest on business overdraft accounts to a total of more than A$2.9 million ($2.13 million) between 2011 and 2018, the Australian Securities & Investments Commission (ASIC) said.
CBA "provided customers with terms and conditions for certain credit facilities that stated an interest rate to be charged or that had been charged," the regulator said in its statement, adding this was 16% a year in most cases.
However, the error saw more than 2,200 customers charged a rate more than double what should have been levied, it added.
And even after unsuccessfully trying to fix the overcharging error following a complaint in 2013, customers continued to face higher rates than stated.
CBA said it had cooperated with ASIC and did not intend to defend the proceedings.
The problems behind the error have been tackled and 2,269 customers refunded a total of A$3.74 million, the lender said in a stock exchange statement.
Between Dec 2014 and March 2018, CBA breached financial services laws 12,119 times, the regulator added. The suit stems from a case study from a Royal Commission into the industry two years ago.
($1=1.3592 Australian dollars)
(Reporting by A K Pranav and Nikhil Kurian Nainan in Bengaluru; Editing by Clarence Fernandez)
