Several major banks will be refunding $60 million worth of fees that were unfairly charged to low-income customers. (Source: Getty)
Several major Australian banks have agreed to refund $60 million worth of fees that affected thousands of Centrelink recipients. A payout of more than $33 million was made to over 150,000 low-income First Nations customers last year.
But the Australian Securities and Investments Commission’s (ASIC) investigation found a further 770,000 customers had been affected by the issue after the regulator expanded the scope of its probe to 21 banks. Some of the latest culprits who will give back the money are ANZ, Westpac, and Bendigo Bank.
The total agreed payout now stands at $93 million, with 920,000 low-income people receiving JobSeeker, the Age Pension, and Disability Support payments found to have been unfairly hit with dishonour, overdraw and account-keeping fees on transaction accounts.
Despite these customers qualifying for accounts that had minimal fees, they were kept in accounts that attracted high charges.
ASIC chair Joe Longo said this result comes after months of scrutinising the banking system and hinted there could be further payouts to come.
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“Despite the improvements banks have made during our surveillance, there is clearly work to be done,” he said.
“It should not take an ASIC review to force $93 million in refunds or make banks assess their processes to ensure the trust and expectations placed in them are justified.”
NAB was the only bank out of the Big Four left out of ASIC’s investigation because it hasn’t charged these fees in more than a decade.
ANZ, Bendigo Bank, and Westpac will make up the bulk of this payout by committing to $57 million worth of refunds to more than 730,000 people.
They will also pay back interest that customers would have accrued had the money stayed in their account rather than being directed to paying off fees.
Several other banks will also pay back $3.6 million to 45,000 customers.
Customers have received huge cash boosts of several thousand dollars, which ASIC commissioner Alan Kirkland said would be life-changing for some low-income people.
“When you read in the report that refunds of $1,200, $2,600 and $5,200 were paid, it’s important to understand what those amounts mean for people struggling to make ends meet,” he said.
“What started as an initiative focused on addressing avoidable bank fees for low-income customers in regional and remote locations, particularly First Nations consumers, revealed a much wider problem affecting customers nationwide.”
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ANZ, Bendigo Bank, and Westpac have now moved roughly 815,000 customers to accounts with lower fees, which will collectively save those affected $40 million per year.
Seven other banks have reviewed and improved their systems, while an additional nine have made it easier for customers to access low-fee accounts.
Commonwealth Bank (CBA) won’t be paying out the $270 million charged to 2.2 million low-income customers between mid-2019 and October 2024.
The bank said those charges were disclosed to customers, who had to agree to those terms and conditions.
Commonwealth Bank said it will not be refunding the $270 million back to customers hit with fees. (Source: Getty) · Lisa Maree Williams via Getty Images
Instead, Australia’s biggest bank said it would move 1.5 million eligible people to a “new nominal fee account” that is yet to be fully approved.
“That will address problems going forward for those people, but what it doesn’t do is set things right for the fees they’ve been charged in the past,” Kirkland said.
“That is extremely disappointing.”
CBA said it had already made $25 million worth of “goodwill” repayments following ASIC’s first report, but stressed this was not as remediation for any contraventions.
Kirkland insisted this fight against the banks wasn’t over. He added that if something feels off with your bank or lender, it’s worth speaking up.
“We encourage consumers to challenge their banks to ensure that they are in the best account for their needs,” he said.
“More importantly, we encourage banks to do more to proactively identify low-income customers and move them to low-fee accounts.
“Our intervention has forced many banks to take action, but more needs to be done to ensure financially vulnerable consumers are not put in this position again.”
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