Major banks are refunding $28 million to low-Income customers following an ASIC review.

Four major Australian banks - ANZ, Commonwealth Bank of Australia (CBA), Bendigo and Adelaide Bank, and Westpac - are set to refund the money after ASIC customers had been charged high fees despite being eligible for more affordable banking products.

An ASIC report released this week found that at least two million low-income customers were kept in high-fee bank accounts. 

These accounts often included complex processes for switching to low-fee alternatives, causing financial distress and hampering savings for many.

“Banks knew that many of these customers on low incomes were in inappropriate high-fee accounts, and it has taken ASIC’s intervention to force them to act,” said ASIC Commissioner Alan Kirkland.

The regulator has urged banks to improve their processes and refund the excessive fees charged to low-income customers. 

The banks have reportedly started migrating over 200,000 customers to low-fee accounts, projecting annual savings of $10.7 million for the affected customers.

Bendigo and Adelaide Bank committed to “new ways to improve customer outcomes”.

Commonwealth Bank of Australia announced the creation of a new low-fee account with a nominal monthly charge for eligible concession customers, including Indigenous Australians, while ANZ, says it is “setting up a process to move cohorts of eligible customers who receive relevant concession payments to a low-fee account on an opt-out basis”.

ASIC's report - “Better Banking for Indigenous Consumers” - reveals that banks often leave vulnerable customers, including those on Centrelink payments, in high-fee accounts.

A total of $24.6 million of the refunded fees are going to people receiving ABSTUDY payments, and residents in areas with substantial First Nations populations. 

ASIC says the report highlights the necessity for all banks to prioritise customer needs and facilitate easy access to low-fee accounts. 

The findings are an outcome of ASIC’s Indigenous Outreach Program and align with the organisation's Indigenous Financial Services Framework and Reconciliation Action Plan.