By Byron Kaye and Paulina Duran
SYDNEY (Reuters) - Commonwealth Bank of Australia, the country's biggest lender, said on Friday it will stop automatically charging customers ongoing service fees in 10 days, admitting it had not yet been able to comply with a regulatory order to do so.
The update from CEO Matt Comyn at a parliamentary hearing suggests Australia's lenders are struggling to end a practice known as "fees for no service" which featured prominently among several institutions at the year-long inquiry.
Comyn said the bank was overhauling its wealth management business so that customers were only charged a fee at the time they received a service, rather than automatically.
"Approximately 97 percent of those fees have been switched off," he said, referring to charges that were billed automatically. He added that 100 percent of the fees would be switched off within 10 days.
The Australian Securities and Investment Commission told CBA's wealth management subsidiary last month to stop automatically taking fees because it had failed to comply with a court order to fix wrongly levied charges.
Australian bank bosses must face regular questioning in parliament but Comyn was the first to appear since the Royal Commission inquiry delivered its final report last month, with 76 recommendations for changes to finance sector rules.
The report also recommended referring 24 misconduct cases to regulators for possible prosecution. Though the report did not specify which cases deserved such attention, they are expected to include instances of fees charged for no service.
Asked how many of the potential prosecutions involved CBA, Comyn said it was "not clear to me".
Shares of Australia's biggest banks have risen since the report was published on Feb. 4 amid relief that the inquiry's recommendations left their market dominance largely unchecked.
CBA shares are up 5 percent since the Royal Commission report came out on Feb. 4, but they are still down 11 percent from their January 2018 peak before the inquiry began.
Comyn dismissed suggestions the report had been soft on the banks, saying it had been an "extremely difficult and confronting process." However, when pressed, he said he had been concerned the commission would recommend tougher lending laws.
The bank had paid customers A$1.4 billion ($983 million) in compensation for wrongdoing, the highest in its history, he said, citing figures given at the bank's half-yearly earnings announcement.
The bank had also been hit with about 5,500 new complaints since the inquiry started, forcing it to hire dozens of extra staff to take on the workload.
