Australia’s largest bank delayed refunding customers charged double interest on business overdrafts to avoid the issue coming up in a parliamentary hearing.
The Commonwealth Bank has repaid almost $3 million to more than 2500 customers overcharged interest on their business overdrafts.
Senior CBA executive Clive van Horen has admitted he delayed sending letters to affected customers for 10 days so it would not come up at a House of Representatives hearing in 2017.
‘Can we make this happen (letters and actual refunds) after the House of Representatives hearing on 7 March?,’ he said in an email revealed at the banking royal commission on Thursday.
‘Eliminates the chance of this being brought up in the hearings and a delay of about 10 days is immaterial.’
Mr van Horen told the royal commission it was the wrong decision.
‘I think it was a poor judgment on my part.’
CBA’s executive general manager of retail products said he appreciated that the issue would be ‘very material’ to customers waiting for refunds.
‘However, it was less than 1500 customers out of 10 million.’
The bank remediated 1490 of 2354 affected customers of a particular small business overdraft, while another 338 different business overdraft customers were also given refunds.
Mr van Horen said weighing heavily on his mind at the time of the email was a recent issue where customer letters about paper statement fees had caused major distress.
‘Personally I was quite bruised by that, and I thought the risk of putting out letters right into the House of Reps hearing where these letters would potentially get picked up and reported in a way which, if the previous experience was anything to go by, was 100 per cent wrong.
‘I accept it was the wrong decision but that was the decision I made.’
Counsel assisting the commission Albert Dinelli said it could be said CBA was more affected by the media and PR than ensuring it did the right thing by its customers.
Mr van Horen initially said it was not as cut and dried as that before stating: ‘I think in short answer, yes.
‘But as I said, weighing on my mind was a scenario where customers were certainly very confused by the way the matter had been reported.’
The inquiry heard CBA knew about the issue in 2013 and thought it had corrected the issue but later put a system fix in place in mid-2015.
CBA did not report the issue to the corporate regulator but, in light of the royal commission, now conceded it was a breach reportable to the Australian Securities and Investments Commission.