ASIC has published the results of its review of target market determinations (TMDs) for both high-fee and low-fee ‘basic’ accounts offered by some of Australia’s major and regional banks.

ASIC issued notices to those banks requiring data on fees charged to consumers in locations with higher-than-average proportions of Indigenous people and for customers in receipt of AbStudy payments.

The review found that some individuals in high-fee transaction accounts, including First Nations people, are paying up to $3000 in overdraw fees over a year, despite being eligible for a low-fee ‘basic’ account. The most prevalent fee was an ‘overdraw’ fee, which is not charged on a low-fee account.

ASIC says that banks need to do more to assist such customers to move into low-fee accounts.

ASIC has written to the banks with its expectations and key findings. This includes outlining reasons for banks to:

• migrate all eligible transaction account customers in Indigenous Pilot locations and those on AbStudy to low-fee accounts on an ‘opt-out’ basis,
• ensure that fees are removed for new and existing customers when products are altered and fee structures changed to remove particular fees,
• review and improve TMDs and account opening procedures in line with Design and Distribution Obligations to prevent future harm of this type to all prospective customers,
• remediate impacted customers, and
• make procedural changes to tailored Indigenous services to better meet their commitments to their Indigenous customers.

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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.