Following ASIC surveillance, CBA reported that a programming error in the bank’s automated serviceability calculator had resulted in housing and living expenses for over 10,000 customers being substituted with a $0.
“As a result, this led to an over-estimation of the consumer's capacity to service the overdraft facility,” ASIC said.
The error resulted in 9,577 consumers being approved for overdrafts that otherwise would have been declined, and 1,152 consumers receiving higher overdraft limits than should have been permitted, ASIC said.
“ASIC was concerned that this conduct breached responsible lending laws and that affected consumers would have been unable to comply, or could only comply with substantial hardship, with their obligation to repay their personal overdraft on demand,” the regulator said.
“Credit licensees should continuously monitor their internal processes to ensure compliance with the law,” added ASIC deputy chair Peter Kell.
“This is especially the case with automated decision-making systems where ongoing monitoring is needed to ensure that information is correctly inputted into systems."
Commonwealth Bank has paid the four infringement notices it was issued, and will write off approximately $2.5 million in overdraft balances, ASIC said.
Read more:
Coalition backs down on lifetime cap
Central bank policy could steepen yield curves
Labour market remains solid: AMP Capital
Be wary of tech stocks, says Stockspot
New analysts join Contango investment team
