July 15th 2024.
After a thorough review, it has been discovered that banks have been charging high fees to customers on low incomes. This has resulted in a total of $28 million being refunded to these customers. The Australian Securities and Investments Commission (ASIC) has uncovered that ANZ, Bendigo and Adelaide Bank, CBA, and Westpac have been keeping at least two million Australians on low incomes in high-fee accounts. This includes individuals who rely on welfare payments and those living in areas with significant First Nations populations. As a result, these customers have faced financial distress due to unnecessary fees and complicated processes.
According to ASIC Commissioner Alan Kirkland, the banks were well aware of the situation and yet failed to take appropriate actions. He stated, "Before our review, most banks only provided their customers with difficult 'opt-in' processes for switching to low-fee banking options, including forcing some consumers to travel hundreds of kilometres to their nearest bank branch." It has taken ASIC's intervention to force the banks to take action and move over 200,000 customers into low-fee accounts. This has resulted in estimated yearly savings of $10.7 million for these customers.
While this is a step in the right direction, Kirkland believes that more needs to be done to ensure that this issue does not happen again. He stated, "This is the second report from ASIC in the last two months that highlights where banks have failed to put customers' needs at the heart of their operations. It highlights the impact the banking system can have on Australians." He emphasized the importance of fair banking services for all Australians, especially those on low incomes or living in regional or remote areas. He called on banks to improve the accessibility and distribution of low-fee accounts and allocate adequate resources to provide specialized services for First Nations communities.
In total, $24.6 million will be refunded to customers receiving ABSTUDY payments and those in areas with significant First Nations populations. This is a significant step towards making the banking system fair and accessible for all Australians. However, Kirkland stressed that it is not just the responsibility of the banks reviewed in this report, but all banks, to take these findings into consideration and make necessary improvements.
In conclusion, it is crucial for banks to have systems and processes in place that make it easy for customers on low incomes to transition to low-fee accounts, regardless of their location. The financial system plays a critical role in the lives of Australians, and it is essential for fair banking services to be provided to all, regardless of their income or location. With the appropriate actions and measures taken, we can ensure that the needs of all customers are met and avoid situations where individuals face financial distress due to avoidable fees and complicated processes.
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