ASIC investigation uncovers widespread banking overcharges
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In a turn of events that has many Australians checking their bank balances with surprise and relief, several of the country's major banks are set to issue refunds to millions of customers after an investigation revealed widespread overcharging.
Commonwealth Bank, Westpac, Bendigo and Adelaide Bank, and ANZ are at the centre of this financial mea culpa, which will see a collective $28 million returned to the pockets of up to two million Australians.
The Australian Securities and Investments Commission (ASIC) conducted a thorough investigation that uncovered a concerning trend:
These banking giants had been keeping customers on low incomes or receiving Centrelink payments in high-fee accounts when more affordable options were available.
The Better Banking for Indigenous Consumers report, which revealed these findings, has prompted a flurry of activity on social media, with customers sharing their stories of unexpected windfalls.
One Commonwealth Bank customer expressed delight at receiving $475.49, while another was pleasantly puzzled by a deposit of $777.64.
ASIC Commissioner Alan Kirkland highlighted the gravity of the situation, pointing out that the banks were aware that many customers were trapped in unsuitable high-fee accounts.
‘Banks knew that many of these low-income customers were in inappropriate high-fee accounts, and it has taken ASIC’s intervention to force them to act,’ he said.
‘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.’
‘Banks need to ensure they have systems and processes in place so [low-income customers] can easily transition to low-fee accounts, regardless of their location.’
The report's findings have since spurred the banks into action, with more than 200,000 customers already moved into low-fee accounts.
This proactive step is estimated to save these customers around $10.7 million in future yearly fees.
Money will be deposited back into bank accounts over the next 18 months.
In other news, Westpac has announced the closure of five additional branches in Victoria and Newcastle, which will impact Bank of Melbourne locations and co-located services in Newcastle.
This decision comes after Westpac's earlier announcement in mid-February regarding the closure of around 20 branches across Queensland, New South Wales, Victoria, and South Australia. You can read more about it here.
Have you received a refund from your bank recently? How has this affected your view of the banking industry in Australia? Let us know in the comments below.
Commonwealth Bank, Westpac, Bendigo and Adelaide Bank, and ANZ are at the centre of this financial mea culpa, which will see a collective $28 million returned to the pockets of up to two million Australians.
The Australian Securities and Investments Commission (ASIC) conducted a thorough investigation that uncovered a concerning trend:
These banking giants had been keeping customers on low incomes or receiving Centrelink payments in high-fee accounts when more affordable options were available.
Millions of Australians will receive refunds after an ASIC investigation revealed that major banks overcharged low-income customers. Credit: Shutterstock
The Better Banking for Indigenous Consumers report, which revealed these findings, has prompted a flurry of activity on social media, with customers sharing their stories of unexpected windfalls.
One Commonwealth Bank customer expressed delight at receiving $475.49, while another was pleasantly puzzled by a deposit of $777.64.
ASIC Commissioner Alan Kirkland highlighted the gravity of the situation, pointing out that the banks were aware that many customers were trapped in unsuitable high-fee accounts.
‘Banks knew that many of these low-income customers were in inappropriate high-fee accounts, and it has taken ASIC’s intervention to force them to act,’ he said.
‘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.’
‘Banks need to ensure they have systems and processes in place so [low-income customers] can easily transition to low-fee accounts, regardless of their location.’
The report's findings have since spurred the banks into action, with more than 200,000 customers already moved into low-fee accounts.
This proactive step is estimated to save these customers around $10.7 million in future yearly fees.
Money will be deposited back into bank accounts over the next 18 months.
In other news, Westpac has announced the closure of five additional branches in Victoria and Newcastle, which will impact Bank of Melbourne locations and co-located services in Newcastle.
This decision comes after Westpac's earlier announcement in mid-February regarding the closure of around 20 branches across Queensland, New South Wales, Victoria, and South Australia. You can read more about it here.
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