CBA teaching primary students how to use credit cards
Commonwealth Bank is facing another public relations storm this morning after a CHOICE investigation found that the bank has been marketing the benefits of credit cards to primary school children.
Details of the practice are contained in a CHOICE submission to ASIC's review of school banking programs that was delivered to the regulator last night.
CHOICE, the country's peak consumer advocate, discovered that the syllabus for the bank's Smart Start program highlights the merits of credit cards as soon as students enter third grade.
"It is alarming that the Commonwealth Bank is introducing kids to the idea of credit cards from Year 3," said the consumer advocate's chief executive, Alan Kirkland.
"Credit cards are complex products with tricky terms and conditions that are designed to make money for banks."
The consumer advocate states in its submission that it holds "deep concerns" about the quality of financial education through school banking schemes such as the Smart Start program.
A description of the Smart Start syllabus published on the bank's website states that the concept of credit cards is expanded and reinforced in workshops for Year 4 primary students.
"CHOICE believes it is problematic that kids as young as eight are being taught about the merits of credit cards, with these messages reinforced in subsequent years," the consumer advocate states in its submission to ASIC.
"Commonwealth Bank appears to be normalising financial products that can be risky and harmful to children who are at an age where they are not yet able to appreciate the risks."
CHOICE found that schools participating in the CBA's Dollarmites program were also exposing children aged between 10 and 12 to credit cards through crossword puzzles.
One crossword provides the following clue for which credit cards is the right answer: "cards that allow you to obtain goods and services before you actually pay for them".
CHOICE argues that the clue creates a misleading impression about credit cards.
"This is a simplistic and disingenuous description of a credit product that emphasises the benefits with no contemplation of the risks," CHOICE argues in the submission.
"The material indicates that the bank's involvement in education is not designed to create critical, financially literate people."
The consumer advocate is demanding that ASIC launch a thorough review of all material used by the bank in its primary school workshops.
"Curbing harmful marketing of credit products to school-aged children will also proactively assist ASIC in its efforts to prevent people from being trapped in a cycle of credit card debt," CHOICE argues.
"ASIC must also gather information about marketing credit products to ex-Dollarmites and Start Smart program participants when they turn eighteen.
"We need to know what approach has been taken over the last two decades and what approach is currently taken by the bank."