SYDNEY (Reuters) - Commonwealth Bank of Australia, the country’s biggest lender, said on Friday it will stop automatically charging customers ongoing service fees in 10 days, admitting it had not yet been able to comply with a regulatory order to do so.
Speaking at a regular parliamentary appearance, the CEOs of CBA and Westpac Banking Corp also reported their banks had received hundreds of new customer complaints in recent months.
Their comments suggest Australia’s lenders are struggling to regain trust from customers and end a practice known as “fees for no service” which featured prominently among several institutions at the year-long inquiry.
Matt Comyn, CBA’s chief executive officer, said the bank was overhauling its wealth management business so that customers were only charged a fee at the time they received a service, rather than automatically.
“Approximately 97 percent of those fees have been switched off,” he said, referring to charges that were billed automatically. He added that 100 percent of the fees would be switched off within 10 days.
The Australian Securities and Investment Commission told CBA’s wealth management subsidiary last month to stop automatically taking fees because it had failed to comply with a court order to fix wrongly levied charges.
Australian bank bosses must face regular questioning in parliament. Comyn was the first to appear since the Royal Commission inquiry delivered its final report last month with 76 recommendations for changes to finance sector rules.
Shares of Australia’s biggest banks have risen since the report was published on Feb. 4 amid relief that the inquiry’s recommendations left their market dominance largely unchecked, although they are still off their pre-inquiry peaks.
Comyn dismissed suggestions the report had been soft on the banks, saying it had been an “extremely difficult and confronting process.” However, when pressed, he said he had been concerned the commission would recommend tougher lending laws.
CBA had spent A$1.4 billion ($983 million) in remediation costs including administrative costs and compensating customers for wrongdoing, the highest in its history, he said.
The bank had also been hit with about 5,500 new complaints since the inquiry started, forcing it to hire dozens of extra staff to take on the workload.
Appearing after Comyn, Westpac executives told lawmakers the banking ombudsman had a backlog of about 800 customer complaint cases related to Westpac.
The inquiry was a “very, very difficult experience,” Westpac Chief Executive Officer Brian Hartzer said.
“I think the recommendations in the end were sensible and balanced and so in that sense I guess I had a positive reaction to that,” he said.
Reporting by Byron Kaye and Paulina Duran in SYDNEY and Ambar Warrick in BENGALURU; Editing by Stephen Coates