ASIC to probe school banking programs after CBA’s Dollarmites initiative awarded a Shonky

The corporate watchdog has flagged a review of school banking following the awarding of a Shonky to CBA’s program.

A CBA branch manager with a Dollormites character.

Australia’s corporate regulator has announced a review of school banking programs in primary schools.

ASIC said today that it will “assess the benefits as well as the risks” and set out principles for appropriate conduct and good practice.

It will also look at how students are engaging with these programs and the accounts established through these programs while they are at school and after they leave school, as well as how the programs are implemented and marketed to school communities.

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

“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.”

Earlier this month, consumer group Choice awarded Commonwealth Bank a “Shonky

A Commonwealth Bank money box.

Award” for its Dollarmites program, prompting other consumer advocate groups to call for the bank to stop using primary schools to market banking products to children.

Choice campaigns and policy head Sarah Agar said today that 35 per cent of all adults still have their first bank account.

“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,” she said.

“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.

“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.”

The Dollarmites program, which has been running since 1931, is marketed by CBA as an interactive and engaging way to teach kids about money and develop saving habits.

The bank overhauled the commission structure it paid to schools in January this year, after consumer advocacy group Choice raised concerns around the “kickbacks” the lender paid for each student that signed up to the program.

The bank now offers commissions to primary schools in exchange for running the school banking scheme, including annual payments of up to $600 a year and ongoing payments of $5 for every 10 deposits per student.

ASIC said that young people are learning about money through financial literacy programs in school and that teachers draw on a range of materials and programs to support an understanding of money and financial concepts.

“School banking programs are offered to primary schools as a way of encouraging and supporting the importance of savings through regular deposits facilitated by the school,” ASIC said.

“Students are learning about the value of money, the cost of living, compound interest, identifying a scam, choosing a mobile data plan and starting a business.

“It is essential that young people develop the knowledge and the skills they need to engage effectively with financial products and services.”