Market news :: Markets, Stock quotes & Investing

Commonwealth bank writes off 25 million worth of overdrafts

THE Commonwealth Bank, has paid $180,000 in fines and written off $2.5 million after a programming error caused it to incorrectly approve almost 11,000 overdraft applications.

The Australian Securities & Investments Commission said the bank, Australias largest, has paid the fines and written off $2.5 million in overdraft account balances after an internal review found the error in an automated calculator used to assess applications for personal overdrafts.

As a result, the bank approved overdrafts without considering the declared housing and living expenses of some consumers between July 2011 and September 2015 a breach of responsible lending laws.

CBAs serviceability calculator substituted $0 housing expenses, and living expenses based on a benchmark which in some instances was substantially less than the living expenses declared by the consumer in their application.

This led to an overestimation of the consumers capacity to service the overdraft facility, ASIC said on Wednesday.

The Commonwealth approved 9577 consumers for overdrafts which would have otherwise been declined and 1,152 consumers for higher overdraft limits than would have been provided.

The bank, which reported the matter to ASIC, said in a statement that affected customers were being contacted to let them know of the error, and the need to remove or reduce their personal overdraft.

We have also advised customers that any outstanding debt associated with this error is being written off ... and that their credit ratings have not been impacted as a result of this mistake, the statement said.

We sincerely apologise to our customers and we regret that this error occurred, Clive van Horen, Executive General Manager, Retail Products and Strategy said.

When we make a mistake that impacts our customers we will put it right to ensure our customers are not adversely affected.

Once we identified this error, we informed the Australian Securities & Investments Commission and have been working with the regulator as we correct this issue for affected customers. We continue to review our systems and processes to ensure we are delivering the best possible customer experience.

Is tony abbott planning to raise the gst

IS TONY Abbott about to raise the GST?

Labor has accused the Prime Minster of using coded language to lay the groundwork for raising the goods and services tax.

Shadow assistant treasurer Andrew Leigh has seized on a speech given by Mr Abbott at the weekend in which he said the dogs breakfast of federation needed to be fixed.

Although he didnt mention the GST explicitly, Mr Abbott said his government would be ready to work with states on reforms to improve their tax base including changes to indirect taxes.

Mr Leigh said the Prime Minister had resorted to code language on his plans to increase the GST.

What Tony Abbott wants to do ought to cause the hairs on the back of Australians necks to stand up, he told reporters in Canberra.

The government had stripped $80 billion in health and education funding in the May budget to starve the states into submission, so they go along with what the Liberal party has always wanted, which is a higher GST, he said.

MORE FEDERAL POLITICS: A bikie, a burqa and the KKK enter parliament
In a speech in Tenterfield on Saturday night, Mr Abbott said he wanted to resolve the mismatch between what states are expected to do and what they can afford.

The states spend a combined $230 billion a year but only raise $130 billion from their own taxes and charges.

Mr Abbott said playing a rule in, rule out game would only generate fear but emphasised his government was determined to avoid increasing the overall tax burden.

The Commonwealth would be ready to work with states on a range of tax reforms that could permanently improve the states tax base including changes to the indirect tax base, with compensating reductions in income tax, he said.

Speaking in Parliament today, Mr Abbott made clear his aim was GST reform but not yet.

Mr Abbott invited Opposition Leader Bill Shorten to join a mature discussion on Commonwealth/state relations, with tax changes on the agenda.

Mr Shorten had reminded Mr Abbott his election promise of no GST change this term in office.

I want to assure members opposite that we will certainly keep our commitments, he said.

But on the subject of the GST, as is well-known, any change to the GST is a matter for the States.