News

Consumer advocates say the Australian Competition and Consumer Commission’s (ACCC) landmark determination requiring banks to proactively move eligible customers into low or no-fee accounts unless they choose to opt out, is a major win that will help thousands of Aussies in the cost-of-living crisis.

“This is a common-sense decision that will put money back into the pockets of people who can least afford to lose it,” said Consumer Action Law Centre CEO, Stephanie Tonkin.

The change follows years of advocacy from consumer groups and financial counsellors calling for banks to move away from an ineffective opt-in system that has left people in vulnerable circumstances paying millions of dollars of unnecessary fees.

“For too long, thousands of low-income Australians, pensioners and concession card holders have languished on inappropriate bank accounts simply because they faced barriers to switching or didn’t know a cheaper option existed,” Ms Tonkin said.

A review by ASIC in 2024 found more than 150,000 low income and First Nations customers paid $6 million in avoidable fees over a year, largely through overdraw and dishonour fees, despite being eligible for a basic account.  Processes to ensure uptake of a basic account were largely ineffective.  The banks targeted in the review have been refunding customers, although the Commonwealth Bank has been much slower, with a CHOICE campaign calling for full remediation of the $270M that ASIC said it owed its customers – the bank has only committed to returning $93M.

While the ACCC’s determination authorises ABA banks to continue offering low and no-fee accounts, it crucially adds conditions requiring banks to identify eligible customers, contact them directly, and migrate them to lower-cost accounts unless the customer opts out.

“Every day we hear on our frontlines how cost-of-living pressures are hitting households very hard, and this decision will help ensure low-income Australians, pensioners and concession card holders avoid an unnecessary cost,” Ms Tonkin said.

“We are delighted the ACCC recognises that just making an account available is not enough. Banks should take active steps to ensure eligible customers receive the benefits they are entitled to.”

Quote attributable to Aaron Davis, CEO, Indigenous Consumer Assistance Network:

“For years banks have known that customers were paying fees they didn’t need to pay because they failed to ensure eligible customers were on low or no fee accounts. As ASIC’s Better Banking Reports have shown, First Nations customers have been among those hit hardest, paying millions in avoidable fees. The ACCC’s determination is a major step forward. It means banks must take responsibility for identifying eligible customers and moving them into more suitable accounts, helping keep millions of dollars in the pockets of people and communities who can least afford to lose it.”

Quote attributable to Morgan Campbell, Head of Policy and Campaigns, CHOICE:

“We’re glad to see the ACCC impose these conditions. Banking is an essential service, and people on low incomes shouldn’t have to jump through hoops to access a low or no fee account.

“Commbank’s charging of $270 million in unfair fees to low-income customers and only agreeing to refund part of that after an enormous amount of public pressure, showed how desperately this change was needed.”

Quote attributable to Jo Harris, Atg CEO, Mortgage Stress Victoria:

“Homeowners struggling to pay their mortgage in a cost-of-living crisis should have the option to save money by shifting to a low- or no-cost account, as long as they are given a genuine option to opt out if that’s their preference.  Paying fees for services and features they don’t need means less money for essentials.” 

Quotes attributable to Drew MacRae, Principal, Policy Development, Financial Rights Legal Centre:

“For far too long banks have placed the onus onto customers experiencing financial hardship or experiencing a form of vulnerability to ask to be placed into more suitable low or no fee accounts. This is plainly unfair and far too great a burden leading to immense harm in the community. The conditions placed on the banks by the ACCC embed the principle that the banks have a responsibility to be proactive and directly contact their customers. In short, the onus has been shifted on to the appropriate party -the bank – the entity who has the both the power and resources to take the necessary steps to help those struggling with their finances.”

“This decision should be read and understood by other financial services sectors too, including those in the customer owned banking, general insurance and life insurance sectors, to name a few. Expectations on financial service firms to be proactive in their engagement with customers have increased. Gone are the days of relying on mere disclosure. Proactively engaging your customers is the new norm.”

Quote attributable to Mark Holden, Acting Director, Mob Strong Debt Help:

“This has been the culmination of many years of hard work which will help mob out. This determination will help many First Nations banking customers where every dollar can be the difference between affording your essential expenses or paying bank fees. It is also important for the member banks under this determination to take the initiative and move those low-income earners into low or no fee accounts with an opt-out process so that they do not need to bear the burden of applying for something they may never hear about.”

Quote attributable to Danielle Walt Director of Policy and Campaigns at Financial Counselling Australia:

“This reform will make a real difference to the clients of financial counsellors. Rather than expecting people in hardship to ask for help, banks will be required to proactively ensure eligible customers receive the protections available to them,”

ENDS 

Media contact:  Mark Pearce, mark@consumeraction.org.au  Tel: 0413 299 567