In a major development, several prominent Australian banks have agreed to repay $93 million in fees unfairly charged to low-income Centrelink recipients.
This comes after a sweeping investigation by the Australian Securities and Investments Commission (ASIC) revealed widespread misuse of account fees affecting nearly 920,000 customers.
Initial Refunds to First Nations Communities
Last year, over 150,000 First Nations customers received more than $33 million in compensation. These individuals, primarily on low incomes, were charged fees for accounts that should have been fee-free or low-cost under their circumstances.
Expanded Investigation Uncovers More Affected Customers
ASIC expanded its probe to cover 21 banks, uncovering that an additional 770,000 Australians receiving JobSeeker, Age Pension, or Disability Support payments were also hit with unnecessary dishonour, overdrawn, and account-keeping fees.
Banks Now Committed to Massive Refunds
The latest banks to join the refund effort include ANZ, Westpac, and Bendigo Bank, who will collectively return $57 million to over 730,000 customers.
This payout includes both fees and associated interest that would have accrued if the funds remained in the customers’ accounts.
An additional $3.6 million in refunds will be distributed by other participating banks to roughly 45,000 people.
ASIC Chair Urges Banks to Take Responsibility
Joe Longo, ASIC Chair, emphasized that the financial institutions should have acted sooner without needing regulatory pressure:
“It shouldn’t take an ASIC review to deliver $93 million in refunds or prompt banks to review their processes,” Longo said.
He also noted that although banks have made progress, there’s more work to be done to restore trust and protect vulnerable consumers.
Notable Exception: NAB and CBA
Interestingly, NAB was excluded from ASIC’s probe since it hasn’t imposed such fees for over a decade.
However, Commonwealth Bank (CBA) has come under criticism for refusing to refund $270 million in fees charged to 2.2 million low-income customers from mid-2019 to October 2024. Instead, CBA stated that all fees were disclosed and agreed upon.
CBA’s Future Plans Draw Criticism
CBA plans to shift 1.5 million eligible clients to a low-fee account, pending regulatory approval. However, ASIC Commissioner Alan Kirkland expressed disappointment:
“While this helps going forward, it doesn’t correct the harm already done.”
Though CBA made $25 million in goodwill payments, it clarified these were not admissions of wrongdoing.
Impact on Affected Customers
The refunds have had a significant financial impact on vulnerable Australians. Some individuals received $1,200, $2,600, or even $5,200—amounts that can dramatically change the financial outlook for people struggling with everyday expenses.
Moving Customers to Low-Fee Accounts
So far, 815,000 accounts have been migrated to lower-fee options, with an estimated annual savings of $40 million. In addition:
- 7 banks have improved systems to identify low-income customers.
- 9 banks now offer easier access to affordable accounts.
What Customers Should Do Next
ASIC urges customers who believe they’ve been unfairly charged to contact their bank and request a review of their account.
Alan Kirkland encourages consumers to be proactive:
“Challenge your bank to ensure you’re in the best account. And banks must do more to support financially vulnerable customers.”
The $93 million refund effort marks a significant victory for financial fairness, particularly for Centrelink recipients and First Nations communities. While some banks have acted promptly to correct their errors, others—like CBA—face ongoing scrutiny.
This development underscores the importance of account transparency, fair banking practices, and regulatory oversight. With continued pressure from ASIC, there’s hope for even more systemic reform to protect Australia’s most vulnerable consumers.
FAQs
How do I know if I’m eligible for a refund?
If you received Centrelink payments like JobSeeker, Age Pension, or Disability Support and were charged account-keeping or dishonour fees, contact your bank to check your eligibility.
Which banks are paying out the largest refunds?
ANZ, Westpac, and Bendigo Bank are responsible for the bulk of the $93 million payout, refunding $57 million to over 730,000 customers.
Has Commonwealth Bank refunded customers?
CBA has not committed to refunding the full $270 million but has issued $25 million in goodwill payments and plans to move eligible clients to low-fee accounts in the future.