In a tale of corporate oversight, four of Australia’s biggest banks are set to refund a whopping A$28 million (around $18.95 million) to their low-income customers. This comes after a stern nudge from the Australian Securities and Investments Commission (ASIC), who found these customers stuck in high-fee accounts despite being eligible for cheaper options.
ASIC’s report didn’t paint a pretty picture for ANZ, Commonwealth Bank of Australia, Bendigo and Adelaide Bank, and Westpac. At least two million customers had been languishing in these costly accounts, racking up unnecessary fees. In July 2023, ASIC took action, sending letters to the banks, urging them to clean up their act and refund the fees.
“Banks knew that many of these customers on low-incomes were in inappropriate high-fee accounts, and it has taken ASIC’s intervention to force them to act,” said ASIC Commissioner Alan Kirkland. It was a clear call-out, putting the banks on the spot for not taking voluntary action.
Under Australia’s banking code of practice, customers on certain government payments can operate low-fee accounts. The report found many such customers had been left in high-fee accounts, impacting their ability to save. Bendigo and Adelaide Bank acknowledged the issue, with a spokesperson admitting there’s more work ahead to improve customer outcomes.
Following the review, the banks have transitioned over 200,000 customers into low-fee accounts. This move is expected to save these customers about A$10.7 million annually.
CBA is taking proactive steps, with a spokesperson announcing the creation of a new low-fee account with a nominal monthly fee for eligible concession customers, including Indigenous concession customers. ANZ is also making specific changes, setting up a process to move eligible customers to low-fee accounts on an opt-out basis.
This episode is a stark reminder of the importance of regulatory oversight and the need for banks to prioritize their customers’ best interests. As these institutions scramble to rectify their mistakes, low-income Australians can look forward to a fairer banking experience and a bit more money in their pockets.
(Source: SBS Australia | Daily Mail | Deccan Herald)
