CommSec overcharged customers $4.35m – here’s how it impacts you
Australia's biggest online broker has admitted to overcharging customer broker fees for up to a decade.
CommBank's brokerage arm CommSec overcharged customers up to $4.3 million on 120,933 occasions between August 2010 and February 2020, according to the corporate watchdog.
ASIC said court proceedings have started against both CommSec and its soon to be divested brokerage advice arm AUSIEX for "significant" financial services compliance failures across numerous business areas.
Of particular note, CommSec charged tens of thousands of customers more than the advertised brokerage rate.
Brokerage, or commission, is the fee you pay every time you place a buy or sell order for a stock. CommSec has a tiered brokerage fee structure, where the higher your trade, the higher your brokerage.
ASIC said some customers were charged $29.95 even if they qualified for the lower rate of $19.95, while others were charged the higher phone broker rate of $59.95 instead of the Internet rate. Some customers placing phone orders were also reportedly charged higher than the advertised rate.
What happened?
It's not fully clear, but CommSec said the issues arose from a combination of IT, human and data-entry errors.
In a statement released Monday, CommSec's managing director Richard Burns has apologised for the mistakes.
“These errors never should have happened. We acknowledge the importance of meeting our compliance obligations and we are committed to continuing to invest in strengthening our systems and procedures,” Burns said.
In addition to overcharging on fees, CommSec also apparently failed to follow its "Best Execution Policy" and did not properly inform some customers of the risks involved in warrants trading before accepting trades.
While a number of other customer issues have been lodged against the broker, including failing to deliver accurate trade confirmations, ASIC said the only issue leading to actual financial loss related to brokerage fees, although "potential financial detriment to customers may have arisen from the Best Execution Issue and Warrant Agreement Issue".
How does it impact you?
It may very well not. If you've been overcharged on brokerage fees, CommSec has most likely already been in touch.
ASIC said that both CommSec and AUSIEX "have compensated, with interest, those customers who were overcharged brokerage fees.”
A CommSec spokesperson told Finder that CommSec is in the very final stages of remediating any impacted customers; however, there may be a very small number that they've been unable to contact. It expects all remediation to be finalised by July 2021.
"Customers can be assured if their account has been impacted, CommSec will take all reasonable steps to contact them."
In the statement, CommSec said it has paid total remediation of $6.5 million to customers, comprising of refunds and "other compensation payments".
If you believe any action caused by your broker has resulted in losses, ASIC's advice is to lodge a complaint directly with the broker first and then to the Australian Financial Complaints Authority (AFCA).
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