ASIC review leads to millions in refunds for low-income bank customers
Australian banks will refund more than $93 million to customers after a review by the Australian Securities and Investments Commission (ASIC) found that many low-income account holders were charged excessive fees.
ASIC’s latest report, “Better and beyond: Expanding better banking outcomes to more low-income Australians” (Report 811), outlines how banks responded to concerns about high transaction account fees, which have affected potentially millions of Australians.
“Despite the improvements banks have made during our surveillance, there is clearly work to be done,” said Joe Longo (pictured), chair at ASIC. “It should not take an ASIC review to force $93 million in refunds or make banks assess their processes to ensure the trust and expectations placed in them are justified.
“Banks need to truly hear the messages in this report – read it, review it, and ask themselves some difficult questions about what led to this situation. We expect banks to regularly assess product design and distribution to ensure customers have the most appropriate products and that they are given the support they need.”
ASIC’s previous review found that at least two million low-income Australians, including those receiving Centrelink payments, remained in high-fee accounts. The latest findings show that even more customers have been affected.
“What started as an initiative focussed 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,” said Alan Kirkland, commissioner at ASIC. “Our latest work has seen the total amount of bank refunds increase to $93 million, and over one million customers moved into low-fee accounts, saving them an expected $50 million in future yearly fees.”
Of the $93 million in refunds, more than $33 million has already been returned to over 150,000 customers. An additional $60 million will be distributed to more than 770,000 customers across the country.
The review covered 21 banks, revealing differences in products, processes, and responses. Three of the four banks named in ASIC’s initial report have now agreed to extend refunds to a broader group of low-income customers. Seven more banks have improved their procedures, and nine have made it easier for customers to access low-fee accounts by removing requirements such as visiting a branch or presenting concession cards.
ASIC also urged banks to enhance services for First Nations customers, with six more institutions now collecting data to better identify and support these clients.
“When you read in the report that refunds of $1,200, $2,600 and $5,200 were paid, it’s important to understand what those amounts mean for people struggling to make ends meet,” Kirkland said. “A $1,200 refund was equivalent to one customer’s fortnightly Age Pension. A $2,600 refund equalled around 110 hours of minimum-wage earnings for another customer, and a $5,200 refund matched 13 weeks of another customer’s JobSeeker payment.
“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. 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.”
ASIC said it would continue to monitor the banks involved and may take enforcement action if necessary.
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