Australia’s corporate regulator has urged banks to provide data on fees charged to Indigenous consumers. The move comes after a review revealed that the banks were falling short of their targets for transitioning First Nations people to low-fee accounts.
According to the Australian Securities and Investments Commission (ASIC), many Indigenous consumers are paying up to A$3,000 ($2,007) annually in overdraw fees by using high-fee transaction accounts, despite being eligible for low-fee basic accounts.
Low-fee accounts involve nominal monthly charges for account maintenance and transactions like ATM withdrawals, whereas high-fee accounts come with additional charges for overdrawing or insufficient funds for scheduled payments.
In a statement, ASIC expressed concern that banks were aware of a significant number of customers eligible for low-fee accounts, but their processes for transitioning these customers were largely ineffective. The regulator noted that migration rates from high-fee to low-fee accounts for most banks ranged between 0.5% to 3%.
ASIC Commissioner Danielle Press emphasized that banks need to take more proactive steps in assisting eligible customers, asking for clarity on when they plan to transition these customers and whether they will provide remediation to impacted individuals.
The Commonwealth Bank of Australia, the country’s largest bank, acknowledged ASIC’s update and expressed its commitment to improving outcomes for Indigenous customers. National Australia Bank clarified that it does not charge a monthly account fee on its two transaction products. The response from the other two major banks to a Reuters request for comment on Indigenous consumer accounts is pending.
This push for improved banking outcomes for Indigenous consumers coincides with an upcoming referendum in Australia to amend the constitution for the recognition of Aboriginal and Torres Strait Islander peoples and establish a parliamentary committee to advise on matters affecting First Nations people. The Commonwealth Bank of Australia has shown strong support for an Indigenous Voice to Parliament, according to a Reuters poll conducted in mid-June.
(Note: Conversion rate: $1 = 1.4945 Australian dollars)