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Commonwealth Bank of Australia CEO apologizes for Youthsaver accounts scam

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Commonwealth Bank of Australia CEO apologizes for Youthsaver accounts scam

Commonwealth Bank of Australia confirmed it has ended a practice by some staff members who manipulated Youthsaver accounts in order to inflate their bonuses and meet performance targets.

In a May 19 statement, CBA CEO Matt Comyn apologized for the practice, saying it did not financially harm any customers but was a "breach of their trust." The bank was responding to a Fairfax Media report detailing how the bank's staff used small, loose change to activate Youthsaver accounts, saving accounts opened by parents for their kids for school banking.

The practice was uncovered following a review in 2013 that confirmed some staff had been making small deposits into Youthsaver accounts. The deposits were meant to make the accounts appear active and, as a result, improve the employee's financial rewards.

CBA immediately made changes to end the practice in 2013. Comyn said the bank was not aware of any evidence that the practice has occurred again in the last five years. The bank has implemented measures to ensure that the practice will never happen again, such as increasing the deposit required to activate a Youthsaver account to A$5 and increased monitoring of new accounts. In addition, it bank has revised branch incentives to focus on customer satisfaction and risk management.

The scandal is the latest in a series that CBA has found itself caught up in. It faced questions over past lapses and misconduct, including losing customers' data and charging clients for services they did not receive, during royal commission hearings. In late April, Australian Prudential Regulation Authority added an additional A$1 billion to the bank's capital requirement over inadequate oversight from senior leadership into a number of scandals, including violating anti-money laundering rules.