ASIC: banks need to do more for Indigenous consumers

Oksana Patron

6 July 2023

The Australian Securities and Investments Commission (ASIC) has said that banks will need to do more to assist customers to move into low-fee accounts, after finding that customers in high-fee transaction accounts, including First Nations people, were paying up to $3,000 in overdraw fees over a year.

Following this, the regulator reviewed target market determinations (TMDs) for high- and low- accounts offered by major and regional banks and issued notices to those banks requiring data on fees charged to consumers in locations with higher-than-average proportions of Indigenous people.

The findings of the review “Better Banking for Indigenous Consumers Project” identified that many Indigenous consumers identified in the data were in high fees, even though they were eligible for a low-fee ‘basic’ account.

ASIC Commissioner Danielle Press said that current processes to transfer eligible customers to low-fee accounts were ‘overwhelmingly ineffective’ and this was  raised with the banks  as ASIC wanted to see “action taken swiftly to change these customers to a low-fee option”.

“It’s unacceptable that we have found many consumers continuing to experience harm through transaction account fees, when banks know these people could be in low-fee accounts,” she said.

Additionally, the review revealed that:

• over 110,000 consumers in identified locations with higher-than-average proportions of First Nations people and in receipt of AbStudy payments are in high-fee accounts, despite being eligible for a low-fee account,
• these consumers paid over $6 million in fees over a twelve-month period, which would have been avoided were they in a low-fee account, and
• the most prevalent fee was an ‘overdraw’ fee, which is not charged on a low-fee account.

“We are asking banks when they will migrate eligible customers to low-fee accounts, and whether they will remediate impacted customers,” Press added.

“We are also asking what changes will be made to ensure tailored Indigenous services are effective. We will be monitoring these issues to ensure changes are made and will prepare a report on this project later in 2023.”