Bank customers on low incomes, including First Nations customers, will be refunded over $28 million dollars after a first-of-its-kind ASIC review revealed four Australian banks systemically charged high fees to those customers who could least afford it.
ASIC's Report 785 Better banking for Indigenous Consumers (REP 785) found that the ANZ, Bendigo and Adelaide Bank, CBA and Westpac kept at least two million Australians on low incomes, including many relying on Centrelink payments to make ends meet, in high-fee accounts.
ASIC Commissioner Alan Kirkland said the banks had 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,' Commissioner 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.'
ASIC's review was focussed on improving financial outcomes for First Nations consumers by addressing avoidable bank fees. The findings have resulted in broader outcomes for people on low incomes nationwide.
Following ASIC's review, the banks have migrated more than 200,000 customers into low-fee accounts, saving these customers an estimated $10.7 million in future yearly savings.
As a result of ASIC's review banks will return over $28 million in fees to these customers over the next 12 to 18 months, including $24.6 million to be refunded to customers receiving ABSTUDY payments and those in areas with significant First Nations populations.
Commissioner Kirkland welcomed the steps the banks had taken but said more needed to be done to ensure the issue didn'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,' Commissioner 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,' he said.
