Millions of dollars in refunds are heading back to some of Australia's most vulnerable.
Earlier this week, the Australian Securities and Investments Commission (ASIC) ordered three of Australia's big banks – ANZ and Westpac, as well as regional lender Bendigo Bank – to repay nearly $60 million to low-income customers after a review found Centrelink recipients had been hit with excessive fees on their transaction accounts.
The review uncovered that around 770,000 customers were overcharged, prompting ASIC to order the banks to repay $60 million nationwide. That's on top of the $33 million the regulatory body ordered additional banks to repay last year, bringing the total amount to $93 million.
Refunds range from $1,200 to as much as $5,200, which ASIC Commissioner Alan Kirland said can make a meaningful difference for those "struggling to make ends meet."
"A $1,200 refund was equivalent to one customer’s fortnightly Age Pension. A $2,600 refund equaled around 110 hours of minimum-wage earnings for another customer, and a $5,200 refund matched 13 weeks of another customer’s JobSeeker payment," he said.
Still, the question remains: will it be enough to help would-be homeowners get closer to a deposit, and ultimately the dream of homeownership?
"I don't think it's going to make a huge difference, because it's a very small population, a small amount and it's a one time payoff," Demal George, chief executive officer and broker at Sydney-based Smartfinn Advisors, told Australian Broker.
"The refund will make a difference to their cashflow, but not for a home deposit," he said. "Because there are a solid set of fees [to purchase a home] that are at least thousands of dollars. And the thing about deposits and stamp duties, they are much larger amounts. So how will a payout of $1,200 from a bank help with your budget?
"And we don't know all the details on the impact per person," George added.
The news of ASIC's repayment orders come as many Australians are struggling with rising costs of living, a housing shortage and uncertainty over the direction of interest rates.
ASIC’s repayment orders come at a time when many Australians are grappling with soaring living costs, a tight housing market and ongoing interest rate uncertainty. In the property market, surging prices have left an increasing number of Australians locked out of home ownership.
Victoria Coster, founder, chief executive officer and credit repair specialist at Sydney-based Credit Fix Solutions, added that bank fees are "ridiculous" and something lenders have "been able to get away with for so long.
"I can see when people, especially when they go into arrears on an account, they get charged additional fees. I've seen up to $40 a month," she said. "How is that helping someone? That person needs financial assistance and the lender is taking another $40 off them that month. So thank goodness people are getting a bit of money back."
As for whether the refunds will spark lasting change among lenders remains to be seen, Coster said. "Things have gotten better. But maybe they'll start looking into their systems a bit more closely. What I'd love to see from, you know, the big banks and major lenders is start leaning more towards education," she said.
