Australian watchdog urges banks to move Indigenous customers into low-fee accounts

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The Australian Securities and Investments Commission (ASIC) found that many Indigenous consumers are paying up to A$3,000 ($2,007) in overdraw fees a year as they are using high-fee transaction accounts, despite being eligible for a low-fee basic account.

Low-fee accounts have small monthly charges for account-keeping and transactions such as withdrawing money from automated teller machines, while high-fee accounts include fees for overdrawing or having insufficient funds available for scheduled payments.

“Concerningly, the review found that banks were aware of high numbers of customers eligible for low-fee accounts but, the majority of banks’ processes to transfer these eligible customers to low-fee accounts were ineffective,” ASIC said in a statement.

The regulator said the majority of banks had migration rates from high-fee to low-fee accounts as low as 0.5% to 3%.

“We are asking banks when they will migrate eligible customers to low-fee accounts, and whether they will remediate impacted customers,” ASIC Commissioner Danielle Press said, adding that banks need to do more in assisting such customers.

Australia’s top four banks did not immediately respond to a Reuters request for comment on Indigenous consumer accounts.

The push for better banking outcomes for Indigenous consumers comes just as Australia gets set to vote in a referendum to change the constitution to recognise Aboriginal and Torres Strait Island people and create a committee in parliament to advise on matters affecting First Nations people.

The country’s largest bank, Commonwealth Bank of Australia (OTC:CMWAY), has expressed strong support and advocacy to back the campaign for an Indigenous Voice to Parliament, according to a poll conducted by Reuters around mid-June.

($1 = 1.4945 Australian dollars)