The Australian Securities and Investments Commission has called on banks to do more to help customers in Indigenous communities access low-fee transaction accounts, after finding that many Indigenous consumers are using high-fee accounts despite being eligible for lower cost services.
In a damning review, the regulator also found that banks were aware of “high numbers” of customers eligible for low-fee accounts but in the majority of cases their processes for transferring these customers to low-fee accounts were ineffective.
ASIC said migration rates were as low as 0.5 per cent and even in the best cases still less than 50 per cent.
It has written to the banks saying it expects them to migrate all eligible transaction account customers in the review locations and those on AbStudy to low-fee accounts, and to remediate impacted customers.
It has also told them to review their target market determinations and account opening procedures to ensure they are in line with Design and Distribution Obligations.
The regulator collected data on banking fees charged to consumers in locations with higher-than-average proportions of Indigenous people, as well as fees paid by customers in receipt of AbStudy payments.
The review identified more than 110,000 consumers who paid more than A$6 million in fees over a 12-month period. The most prevalent fees were overdrawn account fees.
ASIC commissioner Danielle Press said in a statement: “It’s unacceptable that we have found many consumers continuing to experience harm through transaction account fees, when banks know these people could be in low-fee accounts.”
Press said current processes to transfer eligible customers to low-fee accounts are “overwhelmingly ineffective”.
“We have raised these issues with the banks included in the review. ASIC wants to see action taken swiftly to change these customers to a low-fee option,” Press said.
The actions of these banks may also be in breach of their Banking Code obligations. The code says: “We are committed to providing banking services which are inclusive of all people, including Indigenous Australians, including in remote locations.”
The code commits its signatories to take reasonable steps the make banking services accessible to Indigenous customers, to inform Indigenous customers about products and services that are relevant to them, to inform them about accounts or services that have no or low fees, and to assist people in remote communities to access services.