ASIC launches review into school banking

THE future of Dollarmites is looking increasingly uncertain, with the watchdog stepping in amid growing calls for it to be banned.

THE corporate watchdog has announced a review into primary school banking programs like Dollarmites to “ensure they ultimately serve the interests of young Australians”.

The Australian Securities and Investments Commission announced the review on Thursday. It comes amid growing criticism of CommBank’s program in particular, which has been estimated to be worth $10 billion in long-term value.

Revelations in recent months of dodgy tactics, including hefty payments to schools to sign kids up and bank staff fraudulently activating accounts to earn bonuses, led to consumer group Choice handing Dollarmites a Shonky Award earlier this month.

“Transparency around school banking programs is important,” ASIC deputy chair Peter Kell said in a statement.

“ASIC wants to understand the motivations and behaviours around school banking programs to ensure they ultimately serve the interests of young Australians, and to enable school communities to have an understanding of the potential impact of these programs.”

ASIC said the review, expected to be completed by mid-2019, will “seek to understand how these programs are implemented and how they are marketed to school communities” and “how students are engaging with these programs and the accounts established through these programs while they are at school and after they leave school”.

It will also “assess the benefits as well as the risks of school banking programs, and will set out principles for appropriate conduct and good practice in this area”.

“ASIC will consult with various stakeholders including from the education sector, consumer organisations, other regulatory agencies, as well as the banks offering the programs,” the watchdog said.

Choice welcomed the announcement.

Consumer group Choice awarded CommBank a Shonky Award for its Dollarmites program. Picture: Choice/AAP

“Earlier this month, Choice handed Commonwealth Bank a Shonky Award for its dodgy Dollarmites school marketing program,” Choice head of campaigns and policy Sarah Agar said in a statement.

“Choice was joined by other consumer advocacy organisations in calling for the banks to remove their branded marketing from schools.

“ASIC’s review into school banking schemes is an important step to deal with the Commonwealth Bank’s branded marketing material dressed up as a financial literacy initiative. The Dollarmites scheme uses slick marketing to get at kids when they’re young and market products to them, turning them into customers for life.

“Thirty-five per cent of all adults still have their first bank account. The Commonwealth Bank shouldn’t be able to buy its way into schools through its Dollarmites marketing program in order to gain access to long-term customers.

“Given the recent string of scandals uncovered through the Banking Royal Commission, it’s important for the regulator to look into whether we should be trusting the Commonwealth Bank to teach our kids about banking.”

CommBank executive general manager retail bank Mark Jones said, “We welcome the announcement by ASIC to review school banking programs in primary schools.

“We look forward to providing information about our involvement and hearing the range of views from other interested stakeholders. CommBank fully supports initiatives that promote financial literacy.

Participation in CommBank’s 87-year-old School Banking program is voluntary for schools, and parents. As part of the School Banking program, students receive a savings account into which they can deposit money.

“The program is designed to encourage regular savings behaviour and good money habits. (CommBank does not charge fees or market credit products to any customers under 18 years old.)

“CommBank also makes a payment to schools based on the number of participating students, and the frequency of their deposits. The payments recognise schools’ administrative involvement in the program and the time of the around 10,000 program volunteers.

“So far this year schools have on average received $500. In most cases these payments generally go towards school sporting equipment or books in the school library.

“CommBank is continuing to make changes to the program based on broadbased input from schools, P&C groups and community organisations. In this context, we welcome ASIC’s review.”

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