Banks to refund $60m to ripped-off customers

Perth Now

4 days ago

Thousands of Australians wrongly slugged with excessive bank charges will soon receive a refund, as the corporate regulator cracks down on these unfair practices.
In a second round of payments announced on Tuesday, The Australian Securities and Investments Commission said a further 770,000 customers will be refunded $60m.
These refunds will be paid to low-income customers of 21 financial institutions receiving government concession payments, who were placed in higher-fee bank accounts despite a lower fee option being available to them.
This follows $33m in fees already refunded to 150,000 customers which was previously paid out.
Three of the major banks featured in ASIC initial report have now committed to providing refunds of bank fees to a broader group of low-income customers who have been in high-fee accounts. ASIC shows the impact of getting the bank refund. Picture Supplied Credit: Supplied
ANZ will be paying the most out of the big four banks.
According to the report, ANZ will pay out an estimated $47.9m to almost 590,000 account holders for fees dating back until mid-2019 and Westpac $9.9m for fees incurred since 2013.
Commonwealth Bank says it won't be paying any more after previously paying $25m to around 90,000 Indigenous concession customer accounts.
National Australia Bank was not included in the probe as it stopped carrying dishonour, account-keeping or overdraw fees on transaction accounts in 2014.
ASIC chair Joe Longo said, despite the improvements banks have made during our surveillance, there is clearly work to be done.
'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,' he said.
'Banks need to truly hear the messages in this report — read it, review it, and ask themselves some difficult questions about what led to this situation.' Australians are set to be paid $60m in the second round of payments. NewsWire / Nicholas Eagar Credit: NewsWire
As part of the changes, ASIC also encouraged banks to consider introducing or improving First Nations service channels, with six more banks now collecting data to identify First Nations customers to inform appropriate and sensitive service delivery.
ASIC commissioner Alan Kirkland said 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.
'When you read in the report that refunds of $1,200, $2,600 and $5,200 were paid, it's important to understand what those amounts mean for people struggling to make ends meet,' Mr Kirkland said.
'A $1,200 refund was equivalent to one customer's fortnightly Age Pension. A $2,600 refund equalled around 110 hours of minimum-wage earnings for another customer, and a $5,200 refund matched 13 weeks of another customer's Jobseeker payment.'
A spokesperson for ANZ said the bank had taken a 'deliberate decision to expand our remediation payments, leading to a larger cohort of customers being refunded fees and interest'.