Bank customers on low incomes, including First Nations customers, will be refunded over $28 million dollars after a first-of-its-kind ob体育 review revealed four Australian banks systemically charged high fees to those customers who could least afford it.
ob体育's Report 785 Better banking for Indigenous Consumers (REP 785) found that the ANZ, Bendigo and Adelaide Bank, CBA and Westpac kept at least two million Australians on low incomes, including many relying on Centrelink payments to make ends meet, in high-fee accounts.
ob体育 Commissioner Alan Kirkland said the banks had caused financial distress through avoidable fees and complicated bank processes, often creating barriers for regional and remote consumers.
鈥楤anks knew that many of these customers on low-incomes were in inappropriate high-fee accounts, and it has taken ob体育鈥檚 intervention to force them to act,鈥� Commissioner Kirkland said.
鈥楤efore 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.鈥�
ob体育鈥檚 review was focussed on improving financial outcomes for First Nations consumers by addressing avoidable bank fees. The findings have resulted in broader outcomes for people on low incomes nationwide.
Following ob体育's review, the banks have migrated more than 200,000 customers into low-fee accounts, saving these customers an estimated $10.7 million in future yearly savings.
As a result of ob体育鈥檚 review banks will return over $28 million in fees to these customers over the next 12 to 18 months, including $24.6 million to be refunded to customers receiving ABSTUDY payments and those in areas with significant First Nations populations.
Commissioner Kirkland welcomed the steps the banks had taken but said more needed to be done to ensure the issue didn't happen again.
鈥楾his is the second report from ob体育 in the last two months that highlights where banks have failed to put customers鈥� needs at the heart of their operations,鈥� Commissioner Kirkland said.
鈥業t highlights the impact the banking system can have on Australians. Fair banking services for all Australians, including those on low-incomes or located in regional or remote areas, are critical for our financial system.
鈥楤anks need to ensure they have systems and processes in place so customers on low incomes can easily transition to low-fee accounts, regardless of their location.
鈥榃e expect all banks 鈥� not just those we reviewed for this report 鈥� to consider these findings, improve the accessibility and distribution of low-fee accounts and commit adequate resourcing to specialist First Nations services,鈥� he said.
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Report 785 Better banking for Indigenous Consumers (REP 785)
(PDF 1.2 MB)
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Background
ob体育鈥檚 review focussed on banks with a presence in regional and remote locations. In July 2023, ob体育 wrote to the banks calling on them to improve their processes and target market determinations (TMDs) and refund past fees incurred by low-income customers in high-fee bank accounts.
ob体育 analysed each banks鈥� TMDs and data on fees charged to customers on low incomes. ob体育 considered how banks met the design and distribution obligations and asked each bank to address fee harm for people on low-incomes in high-fee transaction accounts.
REP 785 is an outcome of ob体育鈥檚 Indigenous Outreach Program, which works with a range of organisations, including the financial services industry, to influence system change and drive positive financial outcomes for First Nations peoples. The outcomes align with ob体育's Indigenous Financial Services Framework and . This is the first intervention project of its kind to compel widespread meaningful benefits for low-income consumers, including First Nations customers since the release of ob体育鈥檚 Indigenous Financial Services Framework.
ob体育 advises all consumers to talk to their bank to understand what fees they are paying. For further information they could speak to a free and confidential financial counsellor at the National Debt Helpline or through .听