Australian banks are set to refund over 93 million dollars to low-income customers who have been charged excessive fees on their accounts. This decision follows a detailed review conducted by the Australian Securities and Investments Commission (ASIC), which highlighted the widespread issue of high account fees affecting vulnerable consumers.
A report from 7News indicated that many of these customers, particularly those relying on Centrelink payments, were subjected to unfair charges. The findings emphasize the need for broader reforms in the banking sector to better protect financially vulnerable Australians from disproportionate banking costs.
Widespread Impact on Low-Income Australians
Over a million Australians have already been moved to low-fee accounts by Australian banks, with an expected total savings of 50 million dollars in annual fees. The review was part of the Better Banking for Indigenous Consumers report, which uncovered that at least 2 million low-income Australians—many relying on Centrelink payments—were subject to these high fees.
ASIC’s investigation revealed that the issue was far more widespread, affecting low-income customers across the nation.
The review involved 21 banks, and the findings suggested that this practice was not limited to a few institutions. Alan Kirkland, ASIC commissioner, noted that the initiative, which initially aimed to address avoidable fees for customers in regional and remote areas, especially First Nations consumers, highlighted a much larger issue affecting customers nationwide.
Refunds and Further Actions by Banks
Since the publication of the report, ANZ, Bendigo Bank, Westpac, and Commonwealth Bank (including Bankwest) have refunded more than 33 million dollars to customers identified in the initial survey. However, only three of these banks have extended their refund policies to a broader group of low-income customers who had been subjected to high-fee accounts.
Meanwhile, Commonwealth Bank and Bankwest have indicated that they will not provide refunds to customers beyond those in the original group. Despite this, other banks are making efforts to remediate the situation, with a further 60 million dollars expected to be refunded to over 770,000 customers.
Calls for Continuous Improvement
ASIC‘s chairman, Joe Longo, emphasized that it should not take an official review to force such substantial refunds and prompt banks to reassess their processes. He also stressed that banks need to take the findings of this report seriously and make long-term changes to ensure the trust of their customers.
Kirkland echoed these sentiments, urging financial institutions to actively identify low-income customers and move them to suitable, low-fee accounts without needing external intervention. “It should not take an ASIC review to force 93 million dollars in refunds or make banks assess their processes to ensure the trust and expectations placed in them are justified,” he said.
“Our intervention has forced many banks to take action, but more needs to be done to ensure financially vulnerable consumers are not put in this position again,” Kirkland added. “We encourage consumers to challenge their banks to ensure that they are in 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.”
“What started as an initiative focused 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,” Kirkland said.
