Four Australian banks are set to refund almost $30 million to low-income customers after an Australian Securities and Investments Commission (ASIC) review found they were systemically charging high fees to those customers who could least afford it.
Reviewing high-fee and low-fee account data from banks with a presence in regional and remote locations – namely ANZ, Bendigo and Adelaide Bank, Westpac, and CBA – between November 2022 and March 2023, the corporate regulator found they had around 2 million vulnerable customers in high-fee accounts.
These low-income customers included First Nations peoples and those reliant on Centrelink payments to make ends meet.
“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,” observed ASIC commissioner Alan Kirkland.
He stated the banks had caused financial distress through such avoidable fees and complicated bank processes.
“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,” he said.
As a result of the review, ANZ, Bendigo and Adelaide Bank, Westpac, and CBA have agreed to return more than $28 million in fees to these customers over the next 12 to 18 months.
This includes $24.6 million to be refunded to Aboriginal or Torres Strait Islander students receiving ABSTUDY payments, and those in areas with significant First Nations populations.
The four banks have also migrated over 200,000 customers into low-fee accounts, providing future savings of over $10.7 million per annum in fees.
Additionally, following the review, they are expected to send communications to almost 1.5 million customers to advise them of eligibility for a low-fee bank account.
According to ASIC commissioner Kirkland, there is more that needs to be done to ensure the issue is not repeated.
“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.”
He urged banks to ensure they have appropriate processes and systems in place to assist customers on low incomes to easily transition to low-fee accounts, regardless of their location.
Kirkland added: “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.”
