Four of the six largest banks have refunded or will refund more than $28 million to low income customers following a collaborative ASIC review.
A “first-of-its-kind” review revealed “four Australian banks systemically charged high fees to those customers who could least afford it” ASIC said yesterday.
ASIC's report, Better banking for Indigenous Consumers, released yesterday, canvasses more than just banking practices that apply to indigenous customers.
The four banks that participated in this review (from early 2023) were ANZ, Bendigo and Adelaide Bank, Commonwealth Bank and Westpac. CommBank’s Bankwest division was also a focus of the review.
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.
“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.
Our review of high-fee accounts found [numerous]examples of significant fee harm to individual low-income customers during the project period” ASIC said.
“All of the participating banks have committed to customer remediation, with varying timeframes and scope. Some banks moved swiftly in response to fee harm identified during the project and have already paid substantial remediation.”
Curiously, however, “ANZ has opted not to refund customers outside the project cohort, who incurred in excess of $12 million in fees” ASIC said.