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ASIC’s Better Banking for Indigenous Consumers report revealed that ANZ, Bendigo and Adelaide Bank, CBA, and Westpac kept at least 2 million low-income Aussies in high-fee accounts.
Now, the banks will return over $28 million in fees to victims over the next 12–18 months. This will include $24.6 million to be refunded to ABSTUDY payments and those in areas with large First Nations populations.
It’s reported that many of the victims were relying on Centrelink payments. ASIC said the drama has caused “financial distress through avoidable fees and complicated bank processes, often creating barriers for regional and remote consumers.”
“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,” said ASIC commissioner Alan Kirkland.
“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.”
The review was established to help create better financial situations for First Nations customers. Avoidable bank fees were the big target and incidentally the report discovered many low-income Aussies were being stung.
In light of the review, the banks have moved over 200,000 customers into low-fee accounts. This is reportedly saving them a combined $10.7 million in future yearly savings.
ASIC has slammed the banks for failing to put customer needs first.
“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,” Kirkland 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.”
This latest scandal comes just days after ASIC won its first design and distribution obligations (DDO) case against a non-bank lender.
Commenting on the Firstmac incident, ASIC deputy chair Sarah Court said: “ASIC took this case because we were concerned that customers were exposed to the risk they might obtain a financial product that was not appropriate to their needs and objectives.”
To read more on the DDO, click here.
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