Asic Alleges Over 2.9 Million Dollar Overcharge In Interest By Commonwealth Bank Australia

Asic Alleges Over 2.9 Million Dollar Overcharge In Interest By Commonwealth Bank Australia

As many would be aware, commissioner the Honourable Kenneth Madison Hayne AC QC
conducted a Royal Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry. Many issues have been identified and as a result, organisations have needed
to facilitate changes. In some organisations these changes have been small and in for some,
recommended changes have been significant. In some instances, ASIC proceedings have taken
place.


As of December 2020, ASIC commenced proceedings against the Commonwealth Bank of
Australia (CBA). The allegations against the CBA were that the organisation had stated that they
would charge customers a certain interest rate, sent account statements stating the interest
rate charged and then due to a system error, more than 2,200 customers were charged a higher
interest rate on their overdraft accounts. These extra charges are alleged to have overcharged
interest in excess of $2.9 million (ASIC, 2020).


ASIC alleges that the CBA attempted to fix the issue manually but were unsuccessful and as a
result have continued to overcharge customers. ASIC alleges that the CBA have violated
financially services laws on 12,119 occasions (ASIC, 2020).

• CBA’s management of two financial
products; Simple Business and Business
Overdrafts between December 2011 and
March 2018 are the financial products
that these proceedings will address.
• CBA have set up a program which has
compensated 2,269 customers affected
by this issue. CBA have refunded 3.74
million dollars and their remediation has
now concluded.
• The CBA have been previously penalised
by ASIC for $5 million dollars in relation
to their AgriAdvatnage Plus package.

https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-305mr-asic-commences-proceedings-against-cba-for-overcharged-interest-royal-commission-case-study/

https://www.commbank.com.au/articles/newsroom/2020/12/CBA-acknowledges-ASIC-proceedings.html

Image via CBA:
https://www.commbank.com.au/newsroom.html

Read More
The Office Of The Australian Information Commissioner Received 539 Data Breach Notifications From July – December Of 2020

The Office Of The Australian Information Commissioner Received 539 Data Breach Notifications From July – December Of 2020

 

“Entities must have effective systems for
detecting, containing, assessing, notifying
and reviewing data breaches” – Australian
Information Commissioner and Privacy
Commissioner Angelene Falk.
Image Via: Innovation Aus
https://www.innovationaus.com/extraroles-take-new-oaic-funding/

 

 

 

The latest Notifiable Data Breaches Report (see link below) conducted by the Office of Australian Information Commissioner (OAIC) has found that there has been a 5% increase on the previous six months of data breaches. This means there has been 539 data breach notifications from July to December of 2020. This report has found that data breaches as a result of human error on the rise (OAIC, 2021).

In response to this high volume of data breaches being reported, Commissioner Falk urges any organisations that handle personal information to have systems in place for responding to data breaches. As a result of this report, Commissioner Falk has made it clear that organisations have a responsibility to be prepared to provide their clients with information and recommendation quickly and effectively in the event of a data breach (OAIC, 2021).

 

Read More
What Exactly Is A Data Breach?

What Exactly Is A Data Breach?

A data breach occurs where personal information has been accessed or disclosed without
proper authorisation. If your organisation adheres to the Privacy Act 1988, it is your
responsibility to notify anyone affected by a data breach in your organisation where there has
been unauthorised access/disclosure of personal information that has the potential to result in
serious harm (OAIC, 2020).

Examples of a data breach can be as follows:
• Losing a device containing personal information about a client
• Having a device containing personal information about a client stolen
• A hacker accesses personal information about clients
• An email containing personal information about a client is forwarded/ sent to the wrong
person
• Proper security measures weren’t taken or weren’t in place to identify a client over the
phone and then personal information was disclosed.

Where this occurs, it is the duty of the organisation to notify the individual and provide recommendations to handle the data breach (OAIC, 2020). For more on Data Breaches and the Notifiable Data Breach Scheme CLICK HERE

Read More
Crackdown Is Coming For Debt Management Firms

Crackdown Is Coming For Debt Management Firms

For many years the debt management and
credit repair services industry has been
allowed to target vulnerable Australians,
who are looking for a way to deal with their
mounting debt.
Debt management firms, or debt repair
companies promise consumers and make
guarantees to get them a “debt free life” or
“fix their debt by:

  • Cleaning, repairing or removing
    away credit reports.
  • Creating and managing budgets.
  • Negotiating with creditors, debt
    collectors, lenders or companies.
  • Advising and arranging formal debt
    agreements under the Bankruptcy
    Act 1966.

However instead of delivering on these promises, they charge large upfront or structured fees for little,
to no results. It is important to also note that many consumers are unaware of the actual cost of the
company’s service versus the benefit that they will receive. It is largely believed that often the poor
advice given leaves the consumer in a much worse financial position after seeing them.
On 25 September 2020, the Treasurer announced that reforms to Australia’s consumer credit laws were
coming. We are not alone in saying that these reforms are way overdue!


Currently debt management firms are not required to
hold a licence under financial services or credit
licensing regimes that ASIC administers. Whilst some
firms are regulated by the personal insolvency
regulator, majority are seen to fall inside a grey area of
law and this is where the call for tighter compliance has
come.


The proposed legislative reforms will look to protect
vulnerable Australians by requiring debt management
firms to hold an Australian Credit License when they
are paid to represent consumers on matters related to
credit activities.

The consultation process for the reforms ceased on 12 February 2021. The proposed reforms will also
look to strengthen ASIC’s ability to:

  • Supervise the practices of the debt management industry;
  • Stop misleading and deceptive advertising;
  • Prevent unfair contract terms; and
  • Call for further management around fees structures.

We believe that the stronger compliance measures will prevent vulnerable Australians from
being ripped off and we look forward to seeing the changes come into effect. To learn more
about the proposed legislation reforms visit: https://treasury.gov.au/consultation/c2021-
139564

Read More
BEWARE OF AFCA

BEWARE OF AFCA

The Australian Financial Complaints Authority (AFCA) is considered a one stop shop for all
disputes under the ever-encompassing heading of financial services. They consider complaints
about:

  • Credit, finance loans
  • Insurance
  • Banking deposits and payments
  • Investments and financial
    advice
  • Superannuation

All companies that offer a financial
services or credit product are required
to have an external dispute resolution
scheme; and the go to recommended
authority is AFCA.

AFCA’s website states that they are an
impartial and independent company,
who’s role is to assist consumers and
small businesses to reach agreements
with financial firms on how to resolve
their complaints.

Each financial firm is required to pay a “membership” fee each year. This fee provides the
financial firm with the right to show they are a member of AFCA’s dispute resolution scheme
and not much else. Although not a government department, agency or regulator their decisions
are still considered binding on the financial firm. AFCA has the right to award the complainant
with a compensation award and the financial firm must comply with this decision.

It is our opinion from AFCA’s website that even though they are ‘impartial and independent’
they are still geared more towards the consumer, as they state:
“We assist consumers and small business to reach agreements with financial firms
about how to resolve their complaint.”

AFCA does not mention how they assist the financial firms in dealing with complaints or what
resources they provide to their members.

Financial firms should be aware that when a complaint is lodged against them by a consumer,
they will be liable to pay costs for the lodgement and for AFCA’s mediation of the complaint. It
does not matter whether or not the complaint has grounds or if the complaint is decided in the
financial firms favour, the member will still have to bear this cost and depending how far the
complaint progresses, the cost will increase.

As an association we are aware of one financial firm that had to pay over $7,000 in AFCA
hearing costs (on top of the compensation awarded to the complainant plus the yearly
membership costs), even though the complainant was not a customer in over 20 years.
Something of great note, AFCA has the ability to decide time limits for complaints, where
normal disputes would be considered time barred by the Limitations of Actions Act, they can
now be heard by AFCA and even receive a favourable determination.

From published final determinations it is clear that AFCA has very broad discretion in making
decisions. Contrary to common belief, a decision made by AFCA cannot be easily challenged. A
financial firm must accept a final determination or challenge it by bringing an action to the
Supreme Court of Queensland or Federal Court of Australia.
Here are our tips on how to deal with a complaint with AFCA:

  1. Once received do not sit on it, review the complaint thoroughly.
  2. Check whether or not the complaint is within AFCA’s jurisdiction.
  3. Check whether the complaint is consistent with AFCA’s Rules.
  4. Locate all relevant records and material as soon as the complaint is received.
  5. Consider whether the complaint may reveal any systemic issues and whether a strategic
    approach needs to be developed to deal with these issues.

To better understand the powers and jurisdiction of AFCA, we recommend that you read the
AFCA Rules and AFCA Operational Guidelines. This information can be found here.
We encourage you to contact us about how you can best deal with any complaints under AFCA.
Our experience in complaints handling and developing compliance solutions for the financial
services industry ensures we are well-placed to help you navigate complaints and any potential
issues.

Read More