This morning, Commonwealth Bank of Australia [ASX:CBA] has dropped by 1.03% in share value.
They have been consistently dropping for an entire year. Last April, they were trading at $87.40 a share, now they are only trading for $75.01.
Commonwealth’s market cap sits at $131.854 billion, with an enterprise value of $296.5 billion.
Why did the CBA share price drop?
Commonwealth will be refunding up to $16 million to customers who purchased add-on insurance policies from the bank.
The insurance package Commonwealth offered was questionable and Commonwealth has since acknowledged its controversial products while dumping them entirely.
Commonwealth has ended its sales of the CreditCard Plus and Personal Loan Protection products.
ABC news reported that CBA’s Senior Executive Matt Comyn stated:
‘We have found it hard to achieve the right balance between simplicity and accessibility on the one hand, and limiting the product to the right group of target customers on the other hand.’
Last year they were forced to refund a total of $10 million to thousands of CreditCard Plus customers. This came after ASIC’s suspicion that the add-ons were oversold to customers worried about making their repayments.
Commonwealth will also have to pay back $586,000 to at least 10,000 of its customers through the Home Loan Protections consumer insurance.
Despite their products holding a sense of illegitimacy, Commonwealth are working on a new protective solution for their customers.
Losing bid to keep secrets from the public
Recently, the large Australian bank has lost its secrecy in regards to commercially sensitive information that was hidden from the public.
The information included the bank’s involvement with the remediation scheme as well as the Australian securities and investments commission.
The Sydney Morning Herald reported that Commissioner Kenneth Hayne stated:
‘Apart from the one case where a particular customer’s name and policy number would otherwise have been revealed, none of the particular information in respect of which CBA sought directions was shown to be of a kind that should not be published.’
Commonwealth recognised no harm to any person or itself that would follow from publication of the material.
For Money Morning
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