More low-income Australians should soon find themselves on lower-fee bank accounts, after the ACCC granted banks a five-year re-authorisation with tough new conditions attached.
The ACCC has authorised Australian Banking Association (ABA) member banks to keep working together under the Banking Code of Practice to widen access to low-fee and no-fee accounts, and to keep suspending default interest on agricultural loans during droughts and natural disasters.
The ABA first won authorisation for the arrangement in 2019, covering the minimum eligibility criteria and features of basic and other low or no-fee accounts for customers facing hardship, along with the ability to pause default interest on farm loans during drought or disaster. This latest determination renews that authorisation for five years, but with new conditions designed to broaden access further.
Banks must now offer basic, low or no-fee accounts to eligible new customers, and take active steps to identify existing customers who could benefit and move them across unless they choose to opt out. They will also be required to check in on eligible customers at least once a year, and can no longer charge interest on informal overdrafts on these accounts.
The ACCC said the changes were needed after research from the Australian Securities and Investments Commission found more than 150,000 low-income customers remained on higher-fee accounts despite being eligible for cheaper alternatives, and were charged $6 million in fees over just 12 months.
“These conditions will help more eligible Australians access lower-cost banking products and avoid bank fees that significantly impact people on lower incomes,” said ACCC Deputy Chair Mick Keogh.
“We want banks to do more than simply make these accounts available. They should actively identify customers who may benefit and make sure they are aware of their options.”
Mr Keogh said the drought and disaster relief measures remained just as important.
“These protections can make an important difference for farmers experiencing drought or recovering from natural disasters, times when many face significant financial pressures,” Mr Keogh said.
Basic bank accounts carry no account keeping fees and include free everyday banking features such as direct debits, debit card access and unlimited transactions within Australia. Eligible concession card holders also get protections including no dishonour fees, no overdraw fees and restrictions on informal overdrafts.
The ABA represents 20 banks, 17 of which have a retail presence in Australia, and membership requires banks to sign up to the Banking Code of Practice. The ABA must report annually to the ACCC over the five-year authorisation period.
More information, including the ACCC’s determination, is available on the ACCC’s public register at accc.gov.au.
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