Yahoo Finance ‘Mite infestation’: Corporate watchdog takes aim at Dollarmites
A year after consumer advocacy group Choice awarded Commonwealth Bank’s Dollarmites a ‘Shonky’ award, the corporate regulator is initiating an investigation into school banking programs.
In the Australian Securities and Investment Commission’s consultation paper on school banking programs, they said there was “limited evidence among past students that school banking programs have a lasting impact on their saving behaviour”.
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“Their [past students] recall of the program is often limited to the ritual involved.”
And even though students aren’t gaining any good habits, they remain with the bank.
“The research findings indicate that school banking increases the chances of a participating student remaining with the ADI [Authorised Deposit-Taking Institution] that provided the program after they finish school and progress to adulthood,” ASIC wrote.
ASIC’s inquiry began in October last year, but the regulator is now seeking views from parents, teachers and community organisations to get the full picture.
Choice calls out Dollarmites
Last year, Choice gave Commonwealth Bank’s Dollarmites program a ‘Shonky’ award, calling them a ‘mite infestation,’ but not of the insect variety.
“These are 'Dollarmites', from the Commonwealth Bank's youth marketing scheme that mixes unchecked corporate power with primary schools.”
According to Choice’s research, 84 per cent of people got their first account with a big four bank – and 46 per cent of them were with Commonwealth Bank. A third actually retain this account.
“We think employing subversive sales tactics under the guise of youth education is a particularly pernicious act, and we've said in the past that the Dollarmites program should be banned outright.”
‘You got screwed’
Back in 2015, Barefoot Investor slammed Dollarmites for its ‘cutthroat’ behaviour.
“The CBA actually pays cash-strapped schools a $5 kickback for every kid they sign up, plus a 5 per cent commission on whatever the child deposits (up to $10), with ‘a minimum commission payment of $25 per quarter’.
“Does that sound familiar?
“Replace ‘schools’ with ‘financial advisors’ and you’ve got the exact recipe the CBA has used for years to rip millions of dollars from its customers.”
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