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Commonwealth Bank CEO Unaware of $3 Fee Before Media Report

Commonwealth Bank CEO Unaware of $3 Fee Before Media Report

CBA’s Controversial Fee Sparks Outrage

Commonwealth Bank recently faced significant backlash over a controversial $3 “assisted withdrawal fee” applied to the Smart Access account. Customers would incur the fee for withdrawing cash over the counter, through post offices, or via phone. While ATM withdrawals remained fee-free, the announcement sparked public anger, with critics dubbing it the “worst Christmas present ever.”

The bank planned to automatically transition users from the Complete Access account to the Smart Access account starting January 6, 2024. The move impacted customers who rely on in-branch cash withdrawals, further fuelling the controversy.

CEO Matt Comyn Claims Ignorance

Commonwealth Bank CEO Matt Comyn revealed he learned about the $3 fee through media reports, not internal discussions. “I was surprised and disappointed to see that change go out,” Comyn told the Australian Financial Review.

Comyn expressed frustration over the rollout and admitted making inquiries to understand the root cause. “I made a couple of phone calls to try to understand, I think, the root cause of that.”

Leadership Under Fire

The bank disclosed that Angus Sullivan, head of the retail division, led the decision to introduce the fee. Sullivan apologised for the decision and acknowledged the backlash.

Despite the apology, critics targeted the CEO’s apparent lack of awareness. Sky News contributor Rocco Loiacono said, “It is not believable … this apology is kicking the can down the road. This is a deliberate strategy.”

The Bank’s Attempted Justification

Commonwealth Bank argued that dealing in cash costs $400 million annually. This amounts to a $40 annual cost per customer. CEO Matt Comyn defended the decision, saying cash use had declined significantly.

“Five years ago, 43 per cent of all point-of-sale transactions were cash. Today, the figure is around 15 per cent,” Comyn noted.

Customers increasingly rely on digital payments, with weekly transactions through the CommBank app surpassing $18 billion, a 64 per cent increase in two years.

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Public and Political Backlash

The decision faced strong resistance from politicians and the public. Treasurer Jim Chalmers directly contacted Comyn to express concerns. The fee was seen as tone-deaf, given the bank’s near-record profit of $10 billion last financial year and many Australians’ financial struggles.

Comyn admitted he anticipated public outrage. “Frankly, the reaction didn’t surprise me,” he said.

Humiliating Backdown and Adjustments

Two days after emailing a million customers about the switch to the Smart Access account, Commonwealth Bank announced a six-month pause for affected customers. Sullivan stated, “We acknowledge we haven’t got the communication right about this.”

The bank will individually consult 100,000 customers worse off under the new fee structure. It plans to move these customers to accounts better suited to their needs.

However, the $3 fee will still apply to existing Smart Access account holders. The fee will be waived for pensioners, customers under 18, or those depositing at least $2,000 monthly.

Cash Accessibility Concerns Persist

Critics argue that banks like Commonwealth Bank are making cash harder to access. The bank closed 73 branches in 2023 and over 800 ATMs. Community sentiment strongly supports maintaining cash services for those who need them.

The backlash against the $3 fee reflects growing frustration over reduced access to cash and in-person banking services.

Lessons from the PR Debacle

Commonwealth Bank’s leadership must address communication lapses and restore public trust. Matt Comyn’s admission of unawareness raises questions about internal decision-making processes. The episode underscores the importance of aligning customer-focused policies with community expectations.

Angus Sullivan’s assumption that the fee would be “innocuous” highlights the need for better customer consultation before implementing changes. Sullivan acknowledged, “We made the change more difficult than we should have.”

Future of Banking and Customer Relations

Commonwealth Bank must balance technological advancements with customer needs. While digital transactions dominate, cash remains vital for many. The controversy shows banks cannot ignore customer sentiment, especially for vulnerable groups relying on traditional banking methods.

The $3 fee debacle serves as a cautionary tale for banks navigating the shift to digital finance. Effective communication, transparency, and understanding customer needs are crucial for avoiding similar crises.

The Commonwealth Bank’s recovery hinges on rebuilding public confidence and ensuring such missteps do not recur.

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