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Banks

Australia's CBA ordered to pay $5 million fine for overcharging interest

FILE PHOTO: An office building with the Commonwealth Bank logo is seen amidst the easing of the coronavirus disease (COVID-19) restrictions in the Central Business District of Sydney, Australia, June 3, 2020. REUTERS/Loren Elliott/File Photo

(Reuters) - An Australian court fined top lender Commonwealth Bank of Australia A$7 million ($5.36 million) for overcharging interest in a case stemming from a gruelling financial sector inquiry, the country’s securities regulator said on Wednesday.

CBA was found to have misled customers and overcharged interest by more than A$2.2 million over a three-year period by the federal court in February.

The Australian Securities and Investments Commission (ASIC) had sought a A$7 million fine, while CBA made submissions for a penalty of A$4 million to A$5 million.

"CBA's delay in remediating customers following this error was an aggravating factor in the Court's determination of the penalty," ASIC Commissioner Sean Hughes said. (bit.ly/2Q4no3e)

Customers were charged an interest rate higher than advised on more than 12,000 occasions, according to the case filed by ASIC in December.

Financial firms in Australia have faced numerous class actions and penalties over the past two years after a Royal Commission inquiry into the sector found widespread misconduct, including charging fees to dead people.

A CBA spokesperson acknowledged the penalty, adding that the bank had sent refunds to 2,269 customers totalling A$3.74 million.

“Failures of this sort are unacceptable and we apologise to those customers who at the time were overcharged fees,” the spokesperson said.

($1 = 1.3063 Australian dollars)

Reporting by Sameer Manekar in Bengaluru; Editing by Shailesh Kuber and Shounak Dasgupta

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