Australian financial regulators said Monday that four of the country’s largest banks had agreed to repay $20 million in account fees to hundreds of thousands of customers on low incomes, including many Indigenous “First Nation” people. File photo by Paul Miller/EPA
Australian financial regulators said Monday that four of the country’s biggest banks had agreed to repay $20 million in account fees to hundreds of thousands of customers on low incomes, including many Indigenous “First Nation” people.
ANZ Bank, Bendigo and Adelaide Bank, Commonwealth Bank of Australia, and Westpac wrongly kept at least two million Australians, including many dependent on social security or government schemes, in high-fee accounts, the Australian Securities and Investments Commission said in a news release. Advertisement
Recipients of certain so-called Centrelink government payments automatically qualify for low-cost accounts, but instead the banks inflicted financial distress through avoidable fees and complicated bank processes, frequently creating barriers for regional and remote consumers, said ASIC Commissioner Alan Kirkland.
“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 kilometers to their nearest bank branch.”
The banks will return an average of $100 to each of 200,000 customers who they have since migrated to low-fee accounts, of which $16.7 million will go to customers receiving ABSTUDY payments — education grants covering tuition, board, travel and books — paid to Aboriginal or Torres Strait Islanders and those in areas with significant First Nations populations. Advertisement
The commission said its intervention would also save affected customers an estimated combined $7.3 million annually in fees going forward.
The move follows a July 2023 report by the watchdog that found some customers with high-fee transaction accounts, including First Nations people, were being charged more than $2,000 in overdraft fees annually.
The commission ordered banks to provide data on fees charged to consumers in locations with higher-than-average proportions of Indigenous people and for customers in receipt of ABSTUDY payments.
Analysis found that many Indigenous consumers identified from the data had high-fee accounts and consequently were paying “avoidable” fees, despite being eligible for low-fee “basic” accounts.
While welcoming the steps the banks had taken, Kirkland said more needed to be done to ensure the issue did not recur, noting that it was the second example in as many months where the industry had failed to put customers’ needs at the center of their businesses.
“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,” he said.
“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.” Advertisement
He added that the commission expected all banks — not just those who were the subject of Monday’s report — to take note and take steps to improve the accessibility and distribution of low-fee accounts, including deploying adequate resources to the provision of specialist services to First Nations people.
