The Commonwealth Bank published the list of regulatory issues and the actions the bank is taking to address them on its website.
The list
Underpayment of superannuation payments: 36,000 current and former employees are eligible for additional superannuation payments. 'This review [into payment of superannuation over the past eight years] is ongoing and the precise amounts are to be determined'. The 'first tranche, which will commence shortly, is estimated to be $16.7 million plus interest, equating to an average amount per employee of approximately $463 plus interest'.
- Refund for some Credit Card Plus insurance customers:' We self-reported this issue to the Australian Securities and Investments Commission in 2015, fixed the issue and began working with ASIC on a remediation program. 'CBA will refund customers who were not eligible to receive benefits for the period between 2011 and 2015.'We expect the refunds to total approximately $10 million, including interest, for around 65,000 customers, with an average refund of approximately $154 including interest. We will continue to engage with ASIC on their wider industry review into consumer credit insurance'.
- Refund for some Home Loan Protection insurance customers: The bank 'self-identified and reported to ASIC in 2016' that some customers who had purchased Home Loan Protection insurance had been charged an incorrect premium amount or had incurred premium charges before the home loan was drawn down. Both issues were. This investigation is ongoing, however so far we have refunded approximately 9,600 customers a total of approximately $586,000 including interest, with an average refund of approximately $61 including interest.
- Essential Super: ASIC has expressed a concern that some customers may have been given personal advice rather than general advice during the sale of Essential Super. We continue to discuss this topic with ASIC.
- Charges on disputed card transactions: In July 2017, 'we proactively notified ASIC ' that when refunding disputed transactions on customers’ cards, certain charges associated with the disputed transactions were not always correctly adjusted. We reviewed the 4.5 million disputed transactions going back to 2009 and will shortly commence refunding approximately $5 million including interest for around 355,000 customers, with an average refund of approximately $14 including interest.
- Deceased estates: The CBA notified ASIC about an issue affecting some insurance products, where for a number of accounts, a confirmation of the cancellation of an existing insurance policy may not have been sent to the deceased estate. At this stage, the number of customers impacted is expected to be below 1,000. 'We are currently undertaking a detailed investigation back to the year 2000 to confirm the number of affected customers and will contact their estates and remediate if appropriate'.
An ASIC media release quotes ASIC Deputy Chair Peter Kell as commenting in relation to the sale of consumer credit insurance: 'it was unacceptable that customers were sold insurance that did not meet their needs. 'One of ASIC's priorities is addressing poor consumer outcomes associated with add-on insurance, including CCI. Consumers should not be sold products that provide little or no benefit, and banks should have processes in place that ensure this.'
Commonwealth Bank of Australia reportedly may be facing inquiries from a range of regulatory agencies in various jurisdictions
Banking Day writes that the Commonwealth Bank of Australia (CBA) may face inquiries from a range of different regulatory agencies in various jurisdictions over its alleged anti-money laundering failures.
Australia
- AUSTRAC: The CBA is reportedly preparing a response to the Australian Transaction Reports and Analysis Centre's (AUSTRAC's) litigation which alleges more than 53,700 breaches of the anti-money laundering and counter terrorism financing regime.
- APRA: Reportedly, the bank is also facing inquiries from the Australian Prudential Regulation Authority (APRA) about its management of risk culture.
- ASIC: As previously reported, The Australian Securities and Investments Commission, has indicated that it will investigate whether the bank has complied with its disclosure obligations under the Corporations Act 2001 as well as complying with broader conduct and culture obligations.
New Zealand
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The Reserve Bank of New Zealand: The Reserve Bank of New Zealand is reportedly making inquiries into the major banks' AML controls for smart ATMs. The central bank, which oversees AML/CFT supervision, said it had written to each of the country's major banks last week to ascertain the controls they had in place for cash deposits at smart ATMs.
Hong Kong
- As previously reported in Governance News on 14 June, the Hong Kong Monetary Authority, is reportedly to be looking into CBA's systems and controls. According to Banking Day, 'the bulk of the illicit transfers' alleged in AUSTRAC's statement of claim moved through Australian accounts and up to accounts in Hong Kong, which could give the HKMA jurisdiction in the case.
- Reportedly, Bill Majcher, president of corporate risk consultancy EMIDR, said the Hong Kong regulator was likely to be in talks with CBA officials already about the extent to which they had facilitated money laundering and has cautioned local Hong Kong financial institutions to 'look at Australian banks with the same level of caution they exercise when Russian and Chinese banks remit funds via Hong Kong…It is becoming increasingly clear, however, after the Russian Laundromat money laundering operation, Malaysia's 1MDB scandal and now CBA, that no single banking jurisdiction has a monopoly on virtue.'
United States and United Kingdom?
The Australian writes that the investigation is 'expected' to test ASIC Chairman Greg Medcraft's desire for greater integration and cooperation with regulators from around the world as ASIC has the option to request the US Securities Exchange Commission (SEC) and Britain's Financial Conduct Authority (FCA) to carry out work in their respective jurisdictions if it deems it necessary.