Australian banks to refund $18.95m to low-income customers

Four Australian banks are set to refund over A$28 million ($18.95 million) to low-income customers, including First Nations individuals, following a pioneering review by the Australian Securities and Investments Commission (ASIC).

The review, detailed in ASIC’s Report 785, Better Banking for Indigenous Consumers, revealed that ANZ, Bendigo and Adelaide Bank, Commonwealth Bank Of Australia (CBA), and Westpac systematically charged high fees to customers who could least afford them.

ASIC Commissioner Alan Kirkland criticised the banks for causing financial distress through avoidable fees and complex banking processes, particularly affecting regional and remote consumers.

The review found that over two million low-income Australians, many relying on Centrelink payments, were kept in high-fee accounts.

Before the review, banks required difficult ‘opt-in’ processes for switching to low-fee accounts, often necessitating long travel distances for some consumers.

As a result of ASIC’s intervention, over 200,000 customers have been moved to low-fee accounts, saving them an estimated $10.7 million annually.

Additionally, banks will refund more than $28 million in fees over the next 12 to 18 months, including $24.6 million to customers receiving ABSTUDY payments and those in areas with significant First Nations populations.

Commissioner Kirkland recognised the banks’ progress but stressed the importance of continued improvements to prevent future issues.

He noted that recent reports have shown banks’ shortcomings in prioritising customer needs, particularly for low-income Australians and those in remote areas, urging all banks to enhance their systems for transitioning to low-fee accounts and allocate resources to support First Nations services.

Attribution: the Australian Securities and Investments Commission (ASIC).