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Commonwealth Bank of Australia (ASX: CBA) is facing court action over overcharging allegations first aired at the finance industry Royal Commission.
Australian Securities and Investments Commission (ASIC) has started a civil case against CBA for charging an overdraft interest rate "substantially higher" to what its business customers were told.
Over more than 6 years starting from December 2011, ASIC alleges the bank told customers an overdraft rate of 16% per annum, while actually slugging them 34%.
The lower rate continued to be published on periodic statements, the watchdog claims.
The bank tried to manually fix the overcharging error after a complaint was received in 2013.
However, the fix was unsuccessful and clients continued to be overcharged until March 2018, according to ASIC.
In total the overcharged interest amounted to more than $2.9 million.
ASIC is seeking penalties and remediation orders from the court for multiple breaches of the ASIC and Corporations Acts.
CBA stated on Tuesday afternoon it would not defend the proceedings.
"The problems that caused the error have been addressed and 2,269 customers have been sent refunds," announced the bank.
"The combined total of refunds sent to customers was $3.74 million, and the remediation program has now concluded."
Commonwealth Bank shares went on an absolute tear in November, gaining 24% in value. It's at $78.89 in early Tuesday trade.
