Banks in Australia are issuing $19 million in refunds to low-income customers. The move follows an investigation by the Australian Securities and Investment Commission, which said in a Monday (July 15) press release that it determined four of the country’s banks “systemically charged high fees to those customers who could least afford it.” A report […]
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Banks in Australia are issuing $19 million in refunds to low-income customers.
The move follows an investigation by the Australian Securities and Investment Commission, which said in a Monday (July 15) press release that it determined four of the country’s banks “systemically charged high fees to those customers who could least afford it.”
A report by ASIC titled “Better Banking for Indigenous Consumers” found that ANZ, Bendigo and Adelaide Bank, CBA and Westpac kept at least 2 million low-income Australians in high-fee accounts, according to the release.
These lenders “caused financial distress” by levying “avoidable fees” and subjecting consumers to “complicated bank processes,” in many cases putting up “barriers for regional and remote consumers,” the release said.
“Banks knew that many of these customers on low incomes were in inappropriate high-fee accounts, and it has taken ASIC’s intervention to force them to act,” ASIC Commissioner Alan Kirkland said in the release. “Before our review, most banks only provided their customers with difficult ‘opt-in’ processes for switching to low-fee banking options, including forcing some consumers to travel hundreds of kilometers to their nearest bank branch.”
None of the four banks replied to PYMNTS’ request for comment.
In the wake of the review, the banks have moved more than 200,000 customers into low-fee accounts, saving these customers an estimated $7.2 million yearly.
On the other side of the global banking world, PYMNTS wrote last week about banking giant J.P. Morgan Chase’s earnings, which showed — in the words of Chief Financial Officer Jeremy Barnum — “behavior that is consistent with a little bit of weakness in the lower income” client base.
There has been a move from discretionary spending to discretionary categories, although the impact has been “subtle … it all kind of hangs together, in what is, sometimes, actually not a very interesting story,” he added.
PYMNTS Intelligence found that among low-income demographics — people earning less than $50,000 per year — paying for food (25%), housing (37%) and their monthly bills (13%) now makes up 72% of their monthly income.
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