Major banks in Australia have been under scrutiny for charging excessive fees to low-income customers. The Australian Securities and Investments Commission (ASIC) reported that 21 banks had incorrectly charged fees to about 770,000 customers, including First Nations people. These customers, eligible for cheaper banking fees, will be refunded a total of $60 million by the banks.
ASIC’s review revealed that Commonwealth Bank and its subsidiary Bankwest refused to refund $270 million in fees to 2.2 million low-income earners who were charged between July 2019 and October 2024. This decision by CBA and Bankwest has drawn criticism from ASIC, with chair Joe Longo emphasizing the need for banks to assess their processes to meet customer expectations.
Following a previous report that exposed high-fee accounts affecting 2 million low-income Australians, several banks, including ANZ, Westpac, and Bendigo Bank, had committed to refunding $33 million to customers. The recent findings have led to a total of $93 million in refunds promised to over 920,000 low-income customers.
However, ASIC expressed disappointment in Commonwealth Bank and Bankwest for not offering broader refunds to low-income customers as other banks had done. Despite Commonwealth Bank’s previous refund of over $20 million, it declined to provide additional refunds based on the latest report findings.
ASIC commissioner Alan Kirkland criticized CBA’s stance, highlighting the contrast with other banks that had committed to broader refund initiatives. The refusal by CBA and Bankwest to extend refunds to more low-income customers has raised concerns about their commitment to customer welfare.
Commonwealth Bank defended its position, stating that the $270 million in fees had been disclosed to customers and charged in accordance with account terms and conditions. The bank reported a net profit of $5.13 billion in its latest financial results, attributing the growth to core business performance and reduced loan impairment costs.
Despite facing criticism for its refusal to provide broader refunds, Commonwealth Bank remains focused on supporting its customers and delivering positive results for its shareholders. The ongoing debate over excessive fees charged to low-income customers underscores the importance of transparency and accountability in the banking sector.
As the financial landscape continues to evolve, regulators like ASIC play a crucial role in ensuring that banks uphold ethical standards and prioritize customer interests. The case of excessive fees charged by major banks serves as a reminder of the need for greater oversight and consumer protection measures in the financial industry.
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