TRANSCRIPT
The cost of living crisis has been forcing many people with already tight budgets to rein in spending where they can. With many unable to afford to lose money on bank fees they shouldn't be paying for, new findings suggest people have been doing exactly that.
First Nations financial counsellor Bettina Cooper says banks have been misleading millions of low-income customers.
"If you're on a Centrelink income, you're watching every penny. For that penny to be gobbled up by a bank closing branches and making profit while you're working out how to feed your family, yes that causes financial distress, yes that causes mental health distress because you don't have the income you need to provide the basic essentials and yet the bank is profiting from that."
The new report from the Australian Securities and Investments Commission has revealed people receiving Centrelink payments have been kept in high-fee accounts - despite being eligible for cheaper options.
ASIC Commissioner Alan Kirkland says banks have been put on notice.
"When we started looking at the problem we realised it was much bigger than first thought at the outset and that's what prompted ASIC to do this big project. The problem has been that they haven't been proactive in moving those people to those accounts and that's the big shift that ASIC has achieved here. We've said to banks if you can see these people are on low incomes because you can see the Centrelink payments going into their accounts, we expect you to be moving them to low fee accounts unless they tell you they don't want to move."
Over the next 12 to 18 months banks are expected to repay customers over $28 million, including $24.6 million to predominantly First Nations people receiving ABSTUDY payments.
Most of these charges incurred were for overdraw or dishonour fees.
Commissioner Kirkland says banks have been told to improve the way they deal with First Nations customers, with many already implementing those changes.
"We did call for the banks to make a number of changes to how they service First Nations customers, and that includes having specialists call lines that they can contact. Some banks had that before our report, but they've now all agreed to implement those First Nations contact lines, the banks that were involved in this project, and we'd like to see that picked up across the banking sector because often First Nations customers, particularly those living in remote areas, have really particular needs and they need to get specialist support to make sure they're getting the banking services that are right for them."
Around 200,000 customers have already been moved to low-fee accounts in response, saving people nearly $11 million in annual fees.
The banks say they take the findings very seriously and have committed to supporting their Indigenous and Torres Strait Islander customers, taking proactive steps to improve this support.
But Ms Cooper says this should have been remedied years ago.
"People who are on Centrelink benefits are entitled to low or no-fee accounts. Banks have had the ability to do this for years. They've told us they haven't but it's clear from the report ASIC just did they can, and they should have done it years ago."
Across the board, ASIC says its report found more than 1.8 million customers are eligible to make the switch.
