That banks are returning a whopping $93 million in unnecessary bank fees to low-income Australians is huge news. But the decision by CBA to keep an additional $270 million they pocketed, while other banks return their dodgy fees is simply staggering.
ASIC’s Better banking for Indigenous consumers report, published in 2024, showed the impact of bank fees on transaction accounts for people on low incomes. As a direct result of that report, $33 million was returned to Indigenous customers.
Since 2019, the Banking Code of Practice has obliged banks to raise awareness of basic, low or no fee accounts and train staff to identify people that may be eligible for such accounts. And yet, ASIC has found that hundreds of thousands of low-income people have remained on the wrong types of accounts, meaning they paid millions of avoidable account fees from their modest income.
ASIC’s Better and Beyond: Expanding Better banking Outcomes to More Low-Income Australians report released today looks at fees charged beyond that smaller number of First Nations customers identified in the first report - and finds the same problems.
3 of the 4 banks involved in the initial 2024 ASIC report have committed to provide a further $60 million in refunds to over 770,000 low-income customers, and move 820,000 customers to low-fee accounts. They should be acknowledged for providing a fair and timely response when wrongs were identified.
Better and Beyond says that CBA, including Bankwest, provided it with data indicating that between July 2019 and October 2024, it charged approximately $270 million in fees (including account-keeping, dishonour and overdraw fees) to about 2.2 million low-income customers.
CBA paid $25 million of the $33 million refunded to First Nations customers as a result of the first 2024 report. But it has clearly drawn a line on refunding other low-income people who have been charged account-keeping, dishonour and overdraw fee in accounts they should have been migrated from, or never signed up to, due to being low income and receiving Centrelink benefits.
It is particularly unfortunate for CBA that the banking peak body last week released research showing a downward trend in transaction account service fees as a percentage of bank income, which the ABA says dropped from 8% in 2004, to 2% in 2024. That report also claims that in 2024, banks saved customers more than $500 million by providing no or low fee accounts to vulnerable customers.
Again, CBA is the outlier as other banks migrate low-income customers with an opt-out approach to low-fee and no-fee accounts, something advocates called for and applaud. CBA has only committed to migrating people to nominal-fee accounts, but have delayed even this inferior move, waiting to see if the ACCC will force their hand to move low-income customers to a low fee or no fee account. During this extended wait, CBA have continued to profit from the most vulnerable, collecting account-keeping, dishonour and overdraw fees from vulnerable customers - another move that will bolster their bottom line.
Quotes attributable to Bettina Cooper, Senior Financial Counselling and Strategy Lead at Mob Strong Debt Help:
“CBA knows it has unfairly pocketed $270 million in fees and seem comfortable keeping it, while the other banks have willingly returned it. Penny pinching on account fees received from low-income people doing it tough in a cost-of-living crisis while making super profits is not great optics. Particularly when your rivals are stepping up and doing the right thing and returning fees, some with interest.
"It is appalling that CBA is still avoiding transitioning people to an equitable low fee or no fee account without fee harm to low-income people including First Nations people, of which a high number historically bank with them. Shame CBA Shame!
"It’s encouraging to see ASIC identifying fee harm and seeking change from banks, but it is a shame it takes an ASIC report for some banks to action change and be customer focused and for others that is not even enough.”
attributable to Shelley Hartle, First Nations Senior Policy Officer at the Consumer Action Law Centre:
“The $93 million in refunds to around 920,000 customers is a fantastic outcome, and I commend ASIC and the banks that have taken steps to reduce the harms caused by excessive fees on low-income customers.
"At the same time, it's concerning that CBA earned approximately $270 million from these fees between 2019 and 2024, but haven’t yet offered refunds or moved affected customers to low- or no-fee accounts.
"The Banking Code of Practice requires banks to be proactive in protecting customers from fee-related harm, so it’s encouraging to see many banks stepping up to support low-income customers."
Contact
For further information contact media@financialrights.org.au
