Big Banks to Refund Millions in Fees to Low-Income Customers Following ASIC Report

In a groundbreaking move, four major Australian banks have agreed to refund over $28 million in fees to low-income customers (including First Nations people) following an Australian Securities and Investments Commission (ASIC) report titled “Better banking for Indigenous Consumers (REP 785)” revealed systemic overcharging practices that disproportionately affected vulnerable populations.

Findings of ASIC’s Report: Big Banks

The ASIC review identified that ANZ, Bendigo and Adelaide Bank, CBA and Westpac had been charging high fees to at least two million Australians on low incomes, many of whom rely on Centrelink payments, which created significant financial distress, particularly for those in regional and remote areas where access to banking services is already limited.

ASIC Commissioner Alan Kirkland highlighted the banks’ failure to provide adequate and accessible options for low-fee accounts.

‘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,’ Commissioner Kirkland said.

He emphasised that prior to the review banks only offered difficult ‘opt-in’ processes for switching to low-fee options, sometimes requiring consumers to travel extensive distances to the nearest bank branch.

Impact on First Nations and Low-Income Consumers

The review, part of ASIC’s Indigenous Outreach Program aimed to improve financial outcomes for First Nations consumers, however, these findings have broader implications for all low-income Australians.

And as a result of the review, over 200,000 customers have been migrated to low-fee accounts, collectively saving an estimated $10.7 million annually.

Additionally, $28 million in fees will be refunded over the next 12 to 18 months, with $24.6 million specifically earmarked for customers receiving ABSTUDY payments and those in areas with significant First Nations populations.

While Commissioner Kirkland welcomed the banks’ remedial steps, he stressed the need for further actions to prevent recurrence.

‘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,’ Commissioner Kirkland said.

Furthermore, he called for all banks (not just those reviewed) to consider the findings, improve access to low-fee accounts and commit to adequate resources for specialist First Nations services.

ASIC’s intervention is the first of its kind under the Indigenous Financial Services Framework marking a significant step towards financial equity.

Consumers are advised to review their banking fees and consult free financial counselors through the National Debt Helpline or Mob Strong Debt Helpline for assistance.