Commonwealth Bank customers have been issued refunds following an investigation by the Australian Securities and Investments Commission. (Source: Getty)
Millions of low-income Australians are set to receive more than $28 million in refunds from major banks, with some customers seeing payments hit their accounts as early as this week. The refund follows an investigation by the Australian Securities and Investments Commission (ASIC).
ASIC has found that Commonwealth Bank (CBA), Westpac Bank, ANZ Bank, Bendigo Bank and Adelaide Bank kept at least two million low-income Australians in high-fee accounts. According to the Better Banking for Indigenous Consumers report released in July, this included Indigenous customers, many of whom rely on Centrelink payments.
A CBA spokesperson confirmed to Yahoo Finance that affected customers are now receiving their Better Banking Payment refunds in their bank accounts.
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One CBA customer expressed surprise when he saw a $105 payment from his bank appear in his account.
“I got this too. They paid me $777.64…I have no idea what’s going on,” said another.
“Did you just receive $475.49? I’m confused too but happy lol,” added a third.
A Westpac spokesperson told Yahoo Finance that the bank is taking a “proactive approach” to refund affected customers and improve support for customers identified in ASIC’s report and those undergoing ABSTUDY. He said he took it.
“We have refunded account maintenance fees, debit interest, and overdraw fees retroactive to July 2019 for all of these customer trading accounts, not just accounts that receive government payments,” the spokesperson said.
Westpac has also switched to basic concession bank accounts for customers receiving government benefit payments unless they opt out.
Which customers are entitled to a refund?
CBA, Westpac, ANZ, Bendigo and Adelaide Bank have all committed to refunding fees to eligible low-income customers identified in the report.
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More than $28 million of the fees will be returned to customers, with the majority of that amount, $24.6 million, going to ABSTUDY paid customers and customers in areas with large indigenous populations.
As a result of the investigation, CBA has pledged to refund $23 million in fees to approximately 87,000 customers with high-fee accounts. Refunds are for fees incurred between July 2019 and August 2023, including debit interest, dishonored payments, overdraft fees, and account management fees.
Bankwest subsidiary will refund approximately $350,000 in fees incurred between July 2019 and March 2023 to approximately 2,000 customers.
Westpac has already refunded more than $3.8 million in fees to more than 25,000 accounts and has committed to refunding fees incurred between July 2019 and July 2023 to a further 600 accounts. did.
ANZ has committed to refunding account maintenance fees, dishonor fees and account transfer fees incurred from 1 November 2021 to affected customers. The company plans to refund more than $350,000 in fees to more than 5,600 low-income customers.
Bendigo Bank has promised to refund excess withdrawals, dishonors, Bank@Post and account management fees to customers who move to a low-fee account. Refunds are for fees billed between July 1, 2023 and the customer’s transition date. Bendigo Bank expects about 16,900 customers to be refunded $664,000.
Banks were told to do better
ASIC Commissioner Alan Kirkland said avoidable fees and complicated banking procedures to switch to lower-fee banking options were causing banks to run into trouble.
Releasing the report, Kirkland said: “Banks know that many of their low-income customers are in inappropriate, high-fee accounts, and ASIC intervention is needed to force them to take action. It was necessary.โ
After this review, the bank transitioned more than 200,000 customers to low-fee accounts, saving customers an estimated $10.7 million annually in future years.
Mr Kirkland welcomed the bank’s action, but said further steps needed to be taken to ensure it didn’t happen again.
“Banks need to ensure they have systems and processes in place to easily transition low-income customers to low-fee accounts, regardless of their location,” he said.
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