Good Evening everyone, we will be talking about a program coding error that led one of Australia’s biggest bank into the bad books.
The program coding error that was not detected for more than four years ultimately resulted in hundreds of thousands of customers for overdrafts with their rental expenses then being set at zero.
This allowed customers to take more money out of their account then they actually had, with interest charged on the negative balance, and happens generally when the interest rate is set at mid-teens. In this scenario it was set at 16.6%.
This overdraft issue was discovered in the year 2015 in September, when the Consumer Action Legal Centre showed some concerns towards CBA’S overdraft application process.
It was an error which meant that from the year 2011 till 2015 more than 9000 customers were granted an overdraft when their applications should have been refused by the bank because they just could not afford it.
As a result of programming error from 2011 till 2015 CBA failed to take into consideration the declared housing and living expenses of some consumers.
And therefore Australia’s biggest bank has paid $180,000 in fines and also have written off $2.5 million in debts that led to almost more than 9000 overdrafts being granted because of the programming error.
And to deal with situations such as misconducts in banking, in superannuation and in financial services industry the royal commission came into effect last year in December.
I would like to conclude my part by saying that CBA failed to take what the society considers today to be the reasonable steps.