When it comes to saving money, banks are the go-to place for everyone to secure hard-earned cash.

With many banks to choose from, everyone has the right to save money and access reliable banking services.

In a recent turn of events, four of Australia's major banks could return nearly $30 million to their customers following a damning review.

A report by the Australian Securities and Investments Commission (ASIC) shed light on the practices of ANZ, Commonwealth Bank, Westpac, and the mid-tier Bendigo and Adelaide Bank.

The report, set to be released to the public, found that these institutions kept at least two million low-income customers in high-fee accounts.

The report also uncovered that these banks charged exorbitant fees to those reliant on Centrelink payments.

Over 200,000 customers should see changes in their accounts after the ASIC report. Image Credit: Shutterstock/Wara1982

The review was part of ASIC's broader initiative aimed at improving financial services for First Nations customers, including avoidable bank fees.

ASIC commissioner Alan Kirkland highlighted the importance of this project.

'We focused in this project on the banks who were most likely to have First Nations consumers on low incomes trapped in high-fee accounts,' Mr Kirkland shared.

In response to the findings, the said banks pledged to take corrective action.

The four banks committed to transitioning more than 200,000 customers into low-fee or no-fee accounts, which could help banks save around $10.7 million annually.

Additionally, the banks would refund over $28 million in fees to affected customers within the next 12 to 18 months.

This initiative could cover about $24.6 million for Aboriginal and Torres Strait Islander students and apprentices receiving ABSTUDY payments.

It would also cover customers living in areas with substantial First Nations populations.

The review also brought to light the cumbersome processes customers had to endure to switch to low-fee accounts, as some travelled hundreds of kilometres to their bank's nearest branch.

'At any time, ASIC, and the community, expects that the banks will treat their customers fairly,' Mr Kirkland added.

ASIC's report has made it clear that the implications of these findings are not limited to the four banks in question but extend to all banking institutions across Australia.

'We're expecting all of them to read the report and make improvements to their practices to stop other people being trapped in high-fee accounts that they can't afford,' Mr Kirkland concluded.

This news may come as a shock, but it also serves as a reminder to review your bank accounts.

For low-income bank users or those receiving Centrelink payments under these banks, it's worth contacting your bank to see if you're eligible for a low-fee account.

If you have any concerns or questions about your banking arrangements, feel free to reach out to your bank or seek independent financial advice.

Key Takeaways

• Four major Australian banks could refund nearly $30 million to low-income customers following an ASIC review.
• ANZ, Commonwealth Bank, Westpac, and Bendigo and Adelaide Bank kept two million low-income customers—including many dependent on Centrelink payments—in high-fee accounts.
• Over 200,000 customers will be moved to low-fee accounts, saving them approximately $10.7 million a year.
• The banks will also refund over $28 million in fees to affected customers over the next 12 to 18 months, with a focus on First Nations communities.

What do you think of this ASIC report? Share your thoughts and opinions with us in the comments below.

 

[Tervueren]

Not sure how directing Financial institutions to fix up fees charged on accounts that low income earners have is corruption on the part of ASIC.

As regards the separate matter you mentioned, I totally agree that financial advisors from the CBA were found to have acted against the best interests of their clients. This was all brought out formally in a senate inquiry that they had neglected their duties and put their own personal interests first.

However, it’s important to note that ASIC’s role is to regulate and enforce laws to protect consumers, investors, and creditors. They can only act when they become aware of misconduct. In this case, ASIC did take action once the misconduct was brought to their attention.

ASIC brought proceedings against the Commonwealth Bank and Colonial First State alleging breaches of conflicted remuneration laws. However, the Federal Court dismissed these proceedings, finding that Colonial did not breach the law when it agreed to pay the CBA to distribute Essential Super. The court found that the payments made by Colonial to CBA did not constitute benefits within the definition of ‘conflicted remuneration’.

Despite this, six of Australia’s largest banking and financial services institutions, including the CBA, have paid or offered a total of $3.15 billion in compensation, as at 31 December 2021, to customers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice.

I guess it's a moot point as to whether ASIC handled the court proceedings well or not. The Banks were probably flush with a lot more money to pay high end lawyers than a low budget Independent Commission set up by the government. However the exposure that ASIC brought with the court action seems to have pushed the banks to cough up some sizable compensations. Effective or not, I can't answer that one without more understanding of what precisely happened.

My further research tells me it’s also worth noting that ASIC investigations into the conduct of several other advisors at CFPL are ongoing, which gives me the impression that the Commission do hang in there where protection of consumers is needed.

So who do we blame. I would put it that the banks are for doing the dirty in the first place. Personally I have never agreed with the bonus carrot dangled in front of workers that ultimately leads them to put clients interests behind their own.

Maybe the government is partially to blame for not funding the Commission adequately.

Jimmy thank you so much for enlightening me! I was under the impression that it was ASIC's job to keep the Banks and Financial Institutions under control and help to protect customers and to maintain the law. You have far more knowledge about this than I do so thank you for correcting me. I do agree that the Government has underfunded ASIC for many years and this could be part of the problem.

 

[JimmyFlatrock]

Jimmy thank you so much for enlightening me! I was under the impression that it was ASIC's job to keep the Banks and Financial Institutions under control and help to protect customers and to maintain the law. You have far more knowledge about this than I do so thank you for correcting me. I do agree that the Government has underfunded ASIC for many years and this could be part of the problem.

Thank you Tervueren for giving me an opportunity to witness a lesson in graciousness. Difficult, even nigh on impossible for some to do what you have obviously mastered. Cheers Jimmy

 

[Phantom55]

If banks are supposed to check their customers are on the best low fee account for them, then electricity companies should also advise their customers of the best tariff etc to be on. Particularly if you get solar installed.

definitely agree...considering a lot of these companies are NOT elect suppliers, but BILLING AGENCIES which in itself is a inflationary addition . Why cant an electricity co collect their own accounts, the customer is now paying a non electricity co to collect the money, to do this the customer is now paying the overheads of the collection co which is double handling duplicating office, staff,mngment,work cover accounting etc. These costs are already being included with the original elect provider in producing the electricity