Commonwealth Bank backs down on cash cost hike amid anger over fees

Australia’s biggest bank will pause its push to tip customers into new accounts which would charge them $3 per withdrawal.

Federal Treasurer Jim Chalmers soon criticised CBA’s move on Tuesday. Picture: Nikki Short

Commonwealth Bank has backflipped on a move to slug customers a $3 fee to cash out at its branches amid outcry from the top of politics.

CBA, which posted a $9.5bn profit in August, pledged it would hold off moving the nearly 100,000 customers who used their legacy accounts to withdraw cash at the bank’s branches, fee free, backing down from plans touted earlier in the week.

The bank, Australia’s biggest, had planned to shift nearly one million savers on to its “Smart Saver” accounts, shutting down the legacy “Complete Access” product which had been closed to new customers in 2016.

The Smart Access accounts see customers charged $3 fees for making an “assisted withdrawal” of cash at a CBA branch, when taking out money at a teller rather than an ATM.

ATM withdrawals are fee free.

CBA said it would pause the migration of customers for six months, pledging to contact savers who used the bank’s assisted withdrawals offering.

Backing down on plans to charge the fee, CBA head of retail banking services Angus Sullivan said the bank had “not got the communication on this right”.

He said some customers would be better off under CBA’s changes, but acknowledged some would be “slightly worse off”.

CBA retail bank boss Angus Sullivan speaks at the bank's Reimagining Banking Briefing. Picture: Supplied

Almost 9 million customers have CBA’s Smart Access accounts, while a further 1 million have its legacy savings Complete Access accounts.

Mr Sullivan said CBA would contact these legacy customers to shift them to better accounts, declining to detail how much the pause would cost the bank when asked.

“It’s not a question motivated by cost, we feel we could have done a better job communicating to our customers,” he told The Australian.

But, Mr Sullivan said keeping the no-cost over the counter withdrawal for some CBA customers would have some cost for the bank and other account holders.

“Either visibly or invisibly we all carry that cost,” he said.

CBA’s move has also earned the ire of the Albanese government, with Treasurer Jim Chalmers revealing he warned bank boss Matt Comyn the fee imposition was “not acceptable”.

“We considered the changes flagged yesterday to be unacceptable,” the Treasurer said.

“We made our views very clear in the course of the day yesterday.

Dr Chalmers said CBA had been told it would need to “have another look at those changes to make sure that people aren’t worse off”.

“We are talking in lots of instances about some of the most vulnerable people in the banking system,” he said.

“People are doing it tough enough as it is. They didn’t need this at Christmas or at any other time so it’s a good thing that the Commonwealth Bank is having another look at it.”

CBA chief executive officer Matt Comyn speaks at the bank's Reimagining Banking Briefing. Picture: Supplied

However, the move has also highlighted a legion of CBA customers who have been sitting on the bank’s higher cost legacy savings accounts which have been closed to new customers for almost 10 years.

CBA charges its nearly one million Complete Access customers a $6 per month account fee, or $72 per year, while Smart Access customers are slugged only $4 per month.

Customers to both products can avoid fees by meeting a series of hurdles, often involving depositing a certain amount or being under 30.

But, CBA stands to have banked as much as $192m extra from its nearly one million customers who continued to use the more expensive Complete Access accounts after they were shut to new savers in 2016.

Finance Sector Union national secretary Julia Angrisano called for a minimum standard for banks, warning there was no regulation to stop lenders imposing unnecessary fees.

“These fees also serve a darker purpose,” she warned.

“Transaction fees, combined with branch closures and the removal of ATMs, are all designed to reduce the costs on banks, not to benefit customers.”

National secretary of the Finance Sector Union Julia Angrisano. Picture: Hollie Adams

Ms Angrisano took aim at CBA’s fees, cautioning it was “offensive that customers have to pay to access their own money”.

“Banks want customers to access low cost methods of transaction and they don’t care that not all of their customers want to,” she said.

“Banks deny, or charge extra, for choice solely to boost their own profit.”

CBA, which funds 77 per cent of all its lending from deposits, handed shareholders a $2.50 final dividend in September, taking total returns to $4.65.

Bendigo Bank last month also moved to charge customers $2.50 to access cash over the counter.

A spokeswoman for Stephen Jones said the Albanese government “will guarantee the right to access and use cash and crack down on unfair surcharge fees for using your own money”.

“The Government has announced that we have made our position clear on this issue and would urge all banks to do the right thing by their customers,” she said.

Canstar data insights director Sally Tindall said CBA’s decision was a “good reminder” about the prevalence of legacy bank accounts in the financial system.

She noted companies in the electricity sector were required to disclose to customers when a better deal was in place.

“Maybe this is something we need to look at,” she said.

The Australian Securities & Investments Commission (L-R) members Simone Constant, Alan Kirkland and Kate O’Rouke in Sydney for a Parliamentary hearing. Picture: Jane Dempster

The Australian Competition and Consumer Commission, in a 2023 inquiry into deposit pricing, recommended banks tell customers when better interest rates were available on newer savings products.

ASIC commissioner Alan Kirkland said it was clear banks “should do a lot more” to ensure customers weren’t stuck in higher cost or lower interest legacy accounts.

The corporate regulator warned banks in July last year too many customers were stuck in high fee accounts, triggering $28m in refunds by the sector to thousands of customers who had missed out on cheaper bank accounts.

Mr Kirkland said leaving customers in higher cost legacy accounts was “inconsistent with the banking code”.