School banking spotlight

‘ Dollarmites’ criticism prompts regulator review

THE financial regulator will review banking programs in primary schools, amid calls by consumer groups for Australia’s largest bank to stop using schools to market its products.

The Australian Securities and Investments Commission review will include how the programs are implemented and marketed to school communities. The announcement yesterday follows controversy over the Commonwealth Bank’s Dollarmites program, with consumer advocates calling on the bank to stop using it as a marketing tool and cease paying commissions to schools for signing children up to bank accounts.

ASIC deputy chair Peter Kell ( pictured) said transparency around school banking programs was important.

“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,” he said.

The review, to be completed by mid- 2019, will assess the benefits and risks of school banking programs. CBA’s executive general manager retail banking services Mark Jones said the bank was continuing to make changes to its 87- year- old school banking program and welcomed ASIC’s review.

“CommBank fully supports initiatives that promote financial literacy,” he said. Mr Jones noted the program was voluntary for schools and parents, adding it was designed to encourage regular savings behav- iour and good money habits. Choice head of campaigns and policy Sarah Agar said the ASIC review was an important step to deal with CBA’s “branded marketing material dressed up as a financial literacy initiative”.

“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,” Ms Agar said.

Choice and three other con- sumer groups this month called on CBA to remove bank- branded marketing from schools, amid an ongoing campaign to end commissions schools receive for signing children up to bank accounts.

The commissions CBA pays to primary schools include a one- off payment of $ 200 when the first student makes their initial deposit into a Dollarmites account.

Mr Jones said the payments recognised schools’ administrative involvement in the program and the time of about 10,000 program volunteers.