Australia's largest bank delayed refunds for customers charged double interest on business overdrafts to avoid the issue becoming public during a parliamentary hearing.
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One Commonwealth Bank customer who tearfully queried the interest draining her business account was abruptly told "a bank is a business and that is the price you pay for borrowing money".
Senior CBA executive Clive van Horen admitted requesting a 10-day delay in sending refund letters to customers so the issue wouldn't surface at a House of Representatives hearing last year.
"Can we make this all happen (letters and actual refunds) after the House of Reps hearing on 7 March?," he said in an email revealed at the banking royal commission on Thursday.
"Eliminates the chance of this being brought up in the hearings and a delay of 10 days is immaterial."
Mr van Horen accepted he made the wrong decision.
"I think it was a poor judgment on my part," he said on Thursday.
CBA's executive general manager of retail products said he appreciated it was a "very material" issue for people waiting for refunds, but said it involved 1500 customers out of 10 million.
Mr van Horen said a recent mailout about paper statement fees had caused distress at the time, and was weighing on his mind.
"Personally I was quite bruised by that," Mr van Horen said.
"These letters would potentially get picked up and reported in a way which, if the previous experience was anything to go by, was factually 100 per cent wrong."
Counsel assisting the commission Albert Dinelli suggested CBA was more motivated by media and PR than ensuring it did the right thing by its customers.
Mr van Horen ultimately conceded that was the case.
About 2700 customers were affected, with refunds totalling $2.7 million going to more than 1800 people after an average wait of two-and-a-half years.
The error, which meant people with two types of business overdrafts were being charged 33.9 per cent interest instead of 16 per cent, was first identified in 2013.
Commissioner Kenneth Hayne QC suggested the solution was to check whether every overdraft customer was being charged the right interest.
Mr van Horen said CBA's initial manual correction missed a substantial part of the problem before a system-based fix in 2015 worked in the majority of cases.
There was then an enhanced fix in 2017.
The inquiry heard a customer complained to the Financial Ombudsman Service in late 2015 after getting the "bank is a business" rebuff from CBA.
Australian Associated Press
