Low-income earners to benefit from banks refund
The corporate regulator has found banks are charging those who can least afford it more.
Regional banking solution
Face-to-face banking is an essential part of the banking system. However, bank closures, especially in regional and rural areas, are making the provision of face-to-face banking and cash difficult.
The shift to online banking and the exit of banks from alternatives, will have the greatest impact on those who are digitally illiterate, vulnerable, or simply need face-to-face support for complex banking issues (e.g., deceased estates).
National Seniors Australia (NSA) has submitted to the Federal Government a solution to maintaining and returning banking services to older Australians, especially in regional and rural communities.
We propose Australia Post outlets have the potential to play a bigger role in banking services, as they once did.
This would take the government to use the proposed bank levy to assist Australia Post to obtain an authorised deposit-taking institution (ADI) licence to provide essential banking services in areas where these do not exist.
You can read our proposal and other recommendations to the Federal Government budget here.
The Australian Securities and Investment Commission (ASIC) has directed banks that charged high fees to financially vulnerable account holders to refund more than $93 million to customers.
The full extent of the problem is outlined in ASIC’s latest bank-fee review, Report 811, Better and beyond: Expanding better banking outcomes to more low-income Australians.
The report also details banks’ responses to excessive fees charged on transaction accounts, potentially affecting millions of Australians.
ASIC chair, Joe Longo, said, “Despite the improvements banks have made during our surveillance, there is clearly work to be done.
“It should not take an ASIC review to force $93 million in refunds or make banks assess their processes to ensure the trust and expectations placed in them are justified.
“Banks need to truly hear the messages in this report – read it, review it, and ask themselves some difficult questions about what led to this situation.
“We expect banks to regularly assess product design and distribution to ensure customers have the most appropriate products and that they are given the support they need.”
Three of the four banks featured in ASIC’s initial report have now committed to provide refunds of bank fees to a broader group of low-income customers who have been in high-fee accounts.
A further seven banks have improved processes while an additional nine banks have made it easier to access low fee accounts. This included removing the requirement to attend a bank branch or show a Commonwealth Seniors Health Care Card, Health Care Card, or Pensioner Concession Card.
ASIC is putting pressure on the Commonwealth Bank (CBA) to refund its affected customers.
CBA argues the fees in question were disclosed to customers and charged in accordance with their terms and conditions. The bank, which has the most household customers of the big four, said its customers on government concession payments were a diverse group of people with varying levels of income, savings, and property ownership.
ASIC’s previous bank-fee report found banks had kept at least two million low-income Australians, who rely on Centrelink payments, in high fee accounts.
In its latest report, ASIC cast the net over more banks and found even larger numbers of low-income Australians paying too much.
ASIC says what started as an initiative focussed on addressing avoidable bank fees for low-income customers in regional and remote locations, particularly First Nations consumers, revealed a much wider problem affecting customers nationwide.
The $93 million in refunds consists of over $33 million in fees already refunded to more than 150,000 customers and a further $60 million to be refunded nationwide to over 770,000 customers.
ASIC is encouraging bank account holders to challenge their banks to ensure that they have the best account for their needs.
“More importantly, we encourage banks to do more to proactively identify low-income customers and move them to low-fee accounts,” the watchdog said in a statement.
Related reading: SMH, ASIC, NSA Budget Submission
