Over $93 million: Why banks are paying back low-income customers

SBS Australia

28-07-2025

Banks charging excessive fees to low-income Australians have committed to paying back another $60 million to more than 770,000 customers across the country. The commitment is part of a broader review into financial harm incurred through dishonour, overdraw and account-keeping fees on transaction accounts, released by the Australian Securities and Investments Commission (ASIC) on Tuesday. Following the latest review, banks have now committed to paying more than $93 million in total refunds to more than 920,000 low-income customers. "Despite the improvements banks have made during our surveillance, there is clearly work to be done," ASIC chair Joe Longo said.
"It should not take an ASIC review to force $93 million in refunds or make banks assess their processes to ensure the trust and expectations placed in them are justified."
Last July, ASIC released a report highlighting excessive fees charged through transaction accounts to low-income First Nations customers, finding at least two million who relied on Centrelink payments had been kept in high-fee accounts.
The report also included action taken by the four participating banks — ANZ, Bendigo Bank, Commonwealth Bank of Australia (CBA) and Westpac — including promises of $28 million in refunds and the migration of over 200,000 low-income customers from high to low-fee accounts.
Banking practices 'A much wider problem' ASIC's latest report casts a broader net over the banking sector, reviewing the products and processes across 21 banks, including the same four banks as its previous report. Among the other banks included were AMP, Bank Australia, Macquarie, National Australia Bank and Suncorp Bank. It's understood responses were sought from the banks, including how they were responding to recommendations from ASIC's earlier report.
"What started as an initiative focused on addressing avoidable bank fees for low-income customers in regional and remote locations, particularly First Nations consumers, revealed a much wider problem affecting customers nationwide," ASIC commissioner Alan Kirkland said.
What did the 2025 report find? According to the latest report, the four banks have paid over $33 million in refunds to the cohort of customers from the previous report — an increase on the $28 million that was promised. The banks also committed to over $60 million in further refunds to more low-income consumers. This includes three of the four participating banks — ANZ, Bendigo Bank and Westpac — committing to around $57 million in further refunds to over 730,000 customers. The approach of these banks was varied, including the types of accounts and fees subject to remediation.
Seven additional banks committed to paying back $3.6 million, benefiting an extra 45,000 customers.
When it comes to improving customer access to low-fee accounts, ASIC said three of the participating banks had worked to migrate over 815,000 more low-income customers from high to low-fee accounts. This included Westpac, ANZ and Bendigo Bank, while CBA was planning to launch a new nominal fee account. Seven additional banks had reviewed and improved their migration processes, while an extra nine had made it easier to access low-fee accounts, ASIC said. This includes five banks removing the requirement to attend a bank branch to show a Commonwealth Seniors Health Care Card, Health Care Card or Pensioner Concession Card.
Nine additional banks have also improved their internal processes to serve First Nations customers, the report says. This included six banks collecting information on customers who identified as Aboriginal and/or Torres Strait Islander to inform their service delivery.
"Our intervention has forced many banks to take action, but more needs to be done to ensure financially vulnerable consumers are not put in this position again," Kirkland said.
"We encourage consumers to challenge their banks to ensure that they are in the best account for their needs. More importantly, we encourage banks to do more to proactively identify low-income customers and move them to low-fee accounts."
How have banks responded? A spokesperson for ANZ said it has implemented a number of changes since ASIC's first report last year. "As part of our further work, ANZ has also taken a deliberate decision to expand our remediation payments, leading to a larger cohort of customers being refunded fees and interest. This applies to a broad set of customers, not just First Nations customers," they said. "ANZ believes taking an expansive approach to remediation is the right thing to do. We've already refunded thousands of customers and expect these payments to be completed by mid 2026."
Also among ANZ's changes are automatically moving customers who receive particular payments into an ANZ account into a low-fee account, unless they prefer otherwise, improvements to its account opening process for these customers and setting up a dedicated support line for First Nations customers.
A spokesperson for CBA said it "acknowledges ASIC's concerns and the importance of fair and accessible banking for vulnerable and concession customers". They said CBA had paid over $25 million to approximately 87,000 First Nations concession customer accounts in "goodwill payments" — not as remediation for any contraventions. Approximately $270 million in fees charged to about 2.2 million low-income customers between July 2019 and October 2024, referenced in the report, were "disclosed to customers and were charged in accordance with their terms and conditions," the spokesperson said. "The concession customer group is a diverse cohort, including customers with varying levels of income, savings and home ownership. "Our approach focuses on delivering suitable options for this broad range of needs, providing sustainable, full-service banking for all Australians — particularly those in regional and remote communities." The spokesperson said plans to migrate customers to its new nominal account are "temporarily paused pending the consideration by the ACCC of the proposed new authorisation for the Banking Code of Practice". SBS News also contacted Westpac and Bendigo Bank for comment.