CBA agrees to pay $15m to the benefit of the community
The Commonwealth Bank of Australia will pay $15 million to the benefit of the community as part of its enforceable undertakings with ASIC
The Commonwealth Bank of Australia (CBA) has entered into enforceable undertakings and will pay $15 million to the benefit of the community.
Implemented under the Australian Securities and Investments Commission (ASIC), the enforceable undertakings came after the bank was found to have attempted to engage in unconscionable conduct in relation to the Bank Bill Swap Rate (BBWS).
As part of this undertaking, CBA will pay $15 million to be applied to the benefit of the community and $5 million towards ASIC’s investigation and legal costs. In addition, a pecuniary penalty of $5 million will be imposed.
Justice Beach of the Federal Court said that the CBA will pay a total of $25 million sum, which “should be an adequate denouncement of and deterrence against the unacceptable trading behaviours within CBA”.
Beach also notes CBA “ought to have known better” and that the bank should have better supervised its personnel to avoid the BBWS scandal.
A CBA spokesperson told the media the Federal court approved CBA’s settlement and, “as part of this, CBA agreed to enter into enforceable undertakings with ASIC”.
This comes after the Turnbull government proposed to boost financial capabilities with a not-for-profit body tasked with managing and distributing the $40 million of ANZ and NAB settlement agreements throughout the community.
CBA will engage an independent expert to assess the changes the bank has made to its policies, procedures and trading in Prime Bank Bills. CBA admitted it had failed to do all things necessary to ensure honesty and fair financial services.
In a statement released in early June, CBA’s new CEO, Matt Comyn, said the bank has undergone changes so that the issues could be resolved, adding: “These changes are part of a large and concentrated effort to become a better, stronger bank.
“One that earns the trust of our customers, staff, regulators and shareholders.”
ASIC commenced legal proceedings in the Federal Court against CBA after allegations the bank traded in a manner that was unconscionable and created an artificial price and a false appearance with respect to the market that were valued off BBSW.
Earlier this year, ASIC found Westpac had also engaged in unconscionable conduct by its involvement in setting BBSW on four occasions. Since then, the previously first place ranked bank dropped in the Dow Jones Sustainability Index.