The corporate regulator is launching a review of school banking, following criticism of Commonwealth Bank’s Dollarmites program.
- Commonwealth Bank paid schools almost $400,000 for encouraging more students to join Dollarmites
- CBA dominates the market for school banking, with 300,000 students involved
- ASIC’s school banking review comes while banks face the scrutiny of the banking royal commission
ASIC will examine how school banking programs are implemented and marketed, as well as how they affect students’ future banking behaviour.
The announcement comes just weeks after ABC News revealed CBA last year paid a total of almost $400,000 to state schools across Queensland in a bid to encourage more students to join.
The bank was also recently awarded a Shonky award by consumer group Choice for the marketing of Dollarmites and commissions paid to primary schools in exchange for running the scheme.
“Transparency around school banking programs is important,” said ASIC deputy chair Peter Kell.
“ASIC wants to understand the motivations and behaviours around school banking programs to ensure they ultimately serve the interests of young Australians.”
The Commonwealth Bank has a firm grip on the market for school banking, with more than 300,000 students involved at nearly 4,000 schools across the country.
CBA welcomed the review and said it continues to make changes to the program based on input from schools, P&C groups and community organisations.
“Participation in CommBank’s 87-year-old school banking program is voluntary for schools and parents,” CBA’s Mark Jones said in a statement.
“CommBank fully supports initiatives that promote financial literacy.”
Since the start of this year, the bank has capped annual contributions. Schools receive $200 a year for taking part and an additional $100 for every 100 students who sign up, up to a $600 limit.
CBA also removed a previous link between contributions and the amount deposited by students, but schools still receive $5 for every 10th deposit made by a child.
School banking creates customers for life: Choice
Choice has been leading a push to keep banks out of schools, describing CBA’s branded materials provided to students as marketing “dressed up” as financial literacy.
“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,” said Choice’s Sarah Agar.
“35 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.”
The ASIC school banking review comes as the banks face the ongoing scrutiny of the banking royal commission and the big four bank bosses front a parliamentary inquiry in Canberra.
Last week, Commonwealth Bank chief executive Matt Comyn told the House economics committee he should have done more to investigate the manipulation of children’s bank accounts when he was first informed of the conduct as early as 2012.
In May, CBA admitted some branch staff had used bank funds or their own money to illegitimately activate children’s accounts, which were linked to their sales targets.