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Fees waived for vulnerable bank customers

Alex Druce
The ABA code had been updated to address the harm done to low-income consumers

A number of bank fees will be waived for vulnerable customers and drought-stricken farmers in a suite of changes that have been given the all-clear by the consumer watchdog.

The ACCC said on Thursday the Australian Banking Association code had been updated to address the harm done to low-income consumers following the Financial Services Royal Commission.

The code now prohibits informal overdrafts on low- or no-fee basic accounts, unless agreed to by the customer, while also prohibiting overdrawn fees and dishonour fees.

The changes also set out the features of a basic bank account product, including that it will have no minimum deposits, and will provide free direct debit facilities, access to a debit card at no extra cost, and free unlimited domestic transactions.

The ABA, on behalf of its 23 members, had sought ACCC authorisation for the updates following recommendations from Royal Commission.

"We had concerns that the original proposed code did not fully reflect the spirit of the Hayne Royal Commission's recommendations about basic accounts," ACCC deputy chair Delia Rickard said.

"For example, low income customers could have been charged interest rates of up to 20 per cent on overdrawn amounts despite not having agreed to take on an overdraft facility."

Under the conditions, ABA member banks must either not charge interest, or refund any interest charged, on informal overdrafts on basic accounts held by eligible low income customers if the customer has not agreed to an overdraft facility.

Banks must also proactively identify customers who may be eligible for basic accounts.

The ACCC said the code will also prevent default interest and fees being charged on agricultural loans in areas affected by drought and other natural disasters.