ASIC casts doubt over Dollarmites

The Commonwealth Bank's lucrative but controversial Dollarmites program could get the axe, with ASIC seeking the public's view of school banking programs as part of its ongoing review of their use and impact in primary schools.

School banking programs allow a bank to have a relationship with a school to offer deposit products to students, encouraging them to establish bank accounts and make ongoing deposits into those accounts.

"Young people are engaging with money every day and they need to understand financial concepts and develop the skills to identify financial services that are right for them. Financial literacy is embedded in the Australian curriculum, and needs to be - and there is a long history of school banking programs in Australian schools," ASIC commissioner Sean Hughes said.

As CBA's Dollarmites is the most prolific of the programs in question, it is sure to attract some comments from concerned parents.

Choice consumer advocate Jonathan Brown said: "The Dollarmites program is a thinly veiled marketing program to turn our kids into customers for life."

Choice says the Dollarmites program is estimated to be worth nearly $10 billion and is the reason 46% of Australians open their first bank account with CBA.

"We've heard from parents across the country who are fed up with their children being targeted as future customers," Brown added.

Responding to Choice's criticism, a spokesperson for CBA told Financial Standard: "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."

Hughes added: "It is important for ASIC to understand the range and extent of impacts that school banking programs can have on students, parents and school communities, as part of our responsibility to ensure the financial sector is delivering for all Australians, and especially for future generations of financial consumers."

CBA welcomed ASIC's initial announcement of the review into school banking in October last year and says it has been working with the regulator to provide information about the Dollarmites program.

"There are around 3800 Australian schools who voluntarily participate in our school banking program, which has been running in Australian schools for more than 85 years, and has been widely commended and supported by participants, parents, school principals and educators," the spokesperson said.

InfoChoice used ASIC seeking public input on its review to remind consumers that CBA's Youth Saver only pays a base rate of 0.15% pa and is currently paying a maximum interest rate of 2.10% pa.

There are 25 bank accounts for children in the InfoChoice database that beat that base rate and eight accounts that beat CBA's Youth Saver maximum rate.

Read more: ASICDollarmitesCBAChoiceCommonwealth BankAustraliansInfoChoiceYouth SaverJonathan BrownSean HughesFinancial Standard
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