Banks should be responsible for shifting people onto better accounts, say consumer groups
Consumer groups are urging the Australian Competition and Consumer Commission (ACCC) to put the onus on banks to shift people into basic bank accounts as part of the ACCC’s authorisation of the Australian Bank Association’s (ABA) work on basic banking.
The ACCC undertook another brief round of consultation on the ABA’s request following ASIC’s Better and Beyond: Expanding Better banking Outcomes to More Low-Income Australians. The report found CBA had charged approximately $270 million in fees (including account-keeping, dishonour and overdraw fees) to about 2.2 million low-income customers between 2019 and 2024.
Consumer groups, including Financial Rights Legal Centre, Mob Strong Debt Help, Financial Counselling Australia, Choice, and the Consumer Action Legal Centre have made a submission calling on the ACCC to require member banks to:
• Offer a basic bank account by default to all new eligible customers (the default condition); and
• Safely migrate eligible customers to basic bank accounts unless they opt out.
Basic bank accounts are defined by the Banking Code as a special kind of bank accounts with no fees and certain free features. Basic bank accounts are valuable products for low and no income customers. They support financial wellbeing and autonomy and prevent small account balances from being persistently eroded by fees and charges. Preventing harm by moving a customer to a basic bank account would result reduce the harm caused by high fees and create a much fairer banking experience.
Quotes attributable to Bettina Cooper, Senior Financial Counselling and Strategy Lead at Mob Strong Debt Help:
“We already know that people experiencing financial and digital exclusion are the customers likely to be penalised with account keeping, overdraft and dishonour fees.
“The compounding nature of disadvantage means that people who can’t afford to pay fees are also more likely to face barriers like digital exclusion, literacy, limited mobility and access to banking services and pay the poverty premium of fee harm”.
She continued: “Financial counsellors in regional and remote communities are increasingly spending time assisting First Nations and other Australians to navigate banking services and understand their options and rights. Moving people onto low or no fee accounts bank is a straight-forward way to reduce trauma and fee harm”.
Quote attributable to Jean Skeat, Director of Policy and Campaigns, Consumer Action Law Centre:
“It’s unacceptable for banks to put low-income customers on accounts they can’t afford. Banking is an essential service, and financial products need to be safe by design for the people who need them.”
Quotes attributable to Dr Domenique Meyrick, co-CEO of Financial Counselling Australia
“All banks should automatically place low-income customers onto low or no-fee accounts. Being stuck in accounts that add pressure to already tight budgets is completely unfair”.
Quotes attributable to Alexandra Kelly, Director of Casework at the Financial Rights Legal Centre said:
“The reality is that people who can switch to these better offers, are already doing so. It’s the people who can least afford to pay unnecessary fees and charges who are stuck and being slugged unnecessarily.
Banks are unfairly relying on consumer inertia when it comes to shifting people onto low fee accounts. Last month’s Better and Beyond report showed clearly that relying on people to ‘opt-in’ to a lower fee account doesn’t work – whereas moving people unless they expressly opt out does work”.
ENDS
Media contact: Mark Pearce mark@consumeraction.org.au Tel: 0413 299 567
