Banks will refund more than $28 million to customers on low incomes after a review revealed they were systemically charging high fees to those who could least afford it.
Of the $28 million to be refunded, $24.6 million will be refunded to customers receiving ABSTUDY payments and those in areas with significant First Nations populations.
The Australian Securities and Investments Commission (ASIC) report, Better banking for Indigenous consumers, found ANZ, Bendigo and Adelaide Bank, CBA and Westpac kept at least two million Australians on low incomes, including many relying on welfare payments, in high-fee accounts.
ASIC Commissioner Alan Kirkland said the banks had caused financial distress through avoidable fees and complicated processes.
“Banks knew that many of these customers on low-incomes were in inappropriate high-fee accounts, and it has taken ASIC’s intervention to force them to act,” Kirkland said.
“Before our review, most banks only provided their customers with difficult ‘opt-in’ processes for switching to low-fee banking options, including forcing some consumers to travel hundreds of kilometres to their nearest bank branch.”
Following the review, the banks have moved more than 200,000 customers into low-fee accounts, saving these customers an estimated $10.7 million in future yearly savings.
Kirkland said more needs to be done to ensure the issue doesn’t happen again.
‘”This is the second report from ASIC in the last two months that highlights where banks have failed to put customers’ needs at the heart of their operations,” he said.
“It highlights the impact the banking system can have on Australians.
“Fair banking services for all Australians, including those on low incomes or located in regional or remote areas, are critical for our financial system.
“Banks need to ensure they have systems and processes in place so customers on low incomes can easily transition to low-fee accounts, regardless of their location.
“We expect all banks – not just those we reviewed for this report – to consider these findings, improve the accessibility and distribution of low-fee accounts and commit adequate resourcing to specialist First Nations services.”