By Shaun Drummond
Watch out kids, Labor Senator Sam Dastyari has your Commonwealth Bank Dollarmite account in his sights.
At a Melbourne hearing of his inquiry into credit card interest rates on Thursday, he pointed out CBA pays schools $5 per child for every Youth Saver account.
Senator Sam Dastyari questions whether banks should be in schools providing financial adviceCredit: Daniel Munoz
Dollarmites is a "club" that kids can sign up to if parents open a Youth Saver account.
With the number of CBA Youth Saver accounts up from 75,000 in 2009 to the current 273,000 at 3600 schools, and more than a 1 million kids having passed through its Start Smart financial literacy program, the Senator questioned whether the program is about "teaching people to save or grooming clients".
"This is like dracula running the blood bank," he said on Friday.
"We need more financial literacy in schools. The question is: who are the right people to provide that literacy? I don't believe the banks are the right ones to be providing it when there is a vested interest in providing [it]."
"A lot of us have a very innocent view of these accounts. In the past, it was all done by these state owned entities," he said. "My personal view is this is an area ripe for reform."
Government run bank accounts for primary and secondary school students were started in NSW in the 1880s. Commonwealth Bank took over in 1931 when it merged with the Government Savings Bank of NSW.
Canstar lists six other lenders - mostly mutual banks as well as Bendigo Bank - that offer "school banking".
Financial adviser Scott Pape of Barefoot Investor told the inquiry he had misgivings about the school saving scheme."Dollarmites ... is a marketing program and a database."
Mr Dastyari asked whether the committee should recommend private institutions be banned from offering commissions to schools to sign up children to accounts and from providing financial education.
Mr Pape said: "I do not believe that it is in the best interests of schools to be allowing banks to teach financial literacy and offering accounts to children – it is the equivalent of having Ronald McDonald teaching kids about nutrition".
A spokeswoman for CBA said it is proud of Start Smart and separate School Banking program. She said the incentives offered to schools are to "recognise their contribution to administering the program".
"Our School Banking program has been teaching children lifelong money and saving skills for more than 80 years. The program is offered on an opt-in basis to both schools and parents," she said.
"StartSmart is a free financial educational program that provides engaging and interactive workshops, run by expert facilitators, to primary, secondary and VET students. Workshops cover age-appropriate concepts mapped to school curriculum."
The Customer Owned Banking Association, which represents mutual lenders like credit unions, said it "welcomes debate about whether or not some financial literacy programs are more like marketing programs".
"Currently, financial institutions are filling a gap in providing financial literacy programs targeted at young people," said a spokesman.
A NSW Department of Education spokesman said: "The program supports students' financial literacy and numeracy skills. The participation falls under the Department's policy and guidelines on schools' contact with businesses. This includes ensuring there is no endorsement of any product or service and the suitability of organisations."