Keep Commonwealth Bank out of schools, urges Barefoot Investor, Choice

The ‘Barefoot Investor’ and Choice have urged ASIC to halt CBA’s Dollarmites scheme, saying it’s not healthy.

Barefoot Investor Scott Pape runs school programs teaching children about financial literacy. Picture: Jay Town

The Barefoot Investor has urged the corporate watchdog to get Australia’s biggest bank out of primary schools, as the popular personal finance author accused Commonwealth Bank of enriching itself off the back of children.

As part of an ongoing review into school banking, the Australian Securities and Investments Commission has found “limited evidence” to show school banking programs — such as CBA’s “Dollarmites” program — have a lasting impact on teaching children to save.

A series of submissions to ASIC’s review, from consumer advocacy group Choice and from Scott Pape, author of the best-selling Barefoot Investor personal finance books, have recommended banning banks from using schools as “a marketing channel to sell products to our children”.

Choice has urged ASIC to consider whether signing up children to bank accounts through school marketing schemes “is captured under laws prohibiting hawking”.

READ MORE: ASIC to probe school banking programs | Banks had our trust, and they exploited it

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

“Having the Commonwealth Bank, Australia’s largest issuer of credit cards, teaching our kids about money is like having Ronald McDonald teach kids about nutrition. It’s not healthy,” Mr Pape said.

“Independent financial education would teach kids that credit cards should be avoided.

“However, CommBank’s Smart Start exposes children in Year 3 to the merits of credit cards.

“The Year 4 program ‘reinforces and expands on the concepts of credit cards and keycards’,” he said.

If ASIC failed to convince politicians to ban banks in Australian schools, the regulator should prohibit all financial advertising in schools, including hawking of products and the use of logos, while introducing independent financial literacy programs.

Author Scott Pape poses at a launch of his latest book “Barefoot Investor for Families’. Picture: AAP

Choice said there must be careful consideration and evaluation in allowing any corporation access to school-aged children.

“School banking schemes have been running for over a century in Australia but have never been properly reviewed,” Choice boss Alan Kirkland said.

“Choice has yet to see any evidence that the Dollarmites program actually helps kids. It’s unclear if Dollarmites has been evaluated to make sure it boosts education outcomes. Nor do we know what targets the bank sets for staff involved in delivering the program,” Mr Kirkland said.

According to the Choice Consumer Pulse Survey from 2017, 46 per cent of Australians open their first bank account with Commonwealth Bank, and 34 per cent of people still have their first account.

CBA overhauled its commission structure in January last year, after Choice raised concerns around the “kickbacks” the lender paid to schools for each student that signed up to the program. In 2016, Commonwealth Bank paid $2.3m in commissions to schools.

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

“We also recommend ASIC investigate whether the behaviour of banks signing up children to bank accounts through school marketing schemes is captured under laws prohibiting hawking” Mr Kirkland said.

Commonwealth Bank said in a statement that its financial education program is entirely consistent with the National Consumer and Financial Literacy Framework.

“We strongly refute any suggestion that we market credit products to children, this is categorically misinformation. Commonwealth Bank has a strong and respected track record of providing quality financial education programs in Australia and we are always looking at ways we can improve our financial education programs,” the bank said in the statement.

Choice CEO Alan Kirkland.

Both Mr Pape and Choice noted CBA faces a $2bn compensation bill following the banking royal commission.

Choice said it has received reports CBA was signing up to children without parental consent.

Mr Pape said 91 per cent of his readers wanted ASIC to get banks out of schools.

“Banks don’t belong in our classrooms. School banking doesn’t work for our kids. However, it has worked ridiculously well for the Commonwealth Bank,” Mr Pape said.