The First Nations Foundation said it was “left scratching its head” after reading the “embarrassingly limited” final report for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Amanda Young, CEO of the First Nations Foundation said that Commissioner Hayne’s recommendations will do “precious little” to protect Aboriginal and Torres Strait Islander people and build Indigenous financial knowledge.
She noted that 43 per cent of Indigenous Australians are “severely or fully excluded” from the financial system, compared to 17 per cent of the general population.
“A phone line at a bank is hardly going to fix this problematic statistic,” Ms Young said.
Commissioner Hayne communicated a similar view in his final report, saying that: “A telephone service, no matter its efficacy, is not capable of solving all of the issues impeding access to banking services, whether by Aboriginal and Torres Strait Islander people or by others living in remote areas.
“It could only ever form part of a range of initiatives directed towards improving access.”
As such a service has been identified as helpful by those working with Indigenous Australians, the commissioner said he “strongly” encourages its development.
His recommendation was for the Australian Banking Association to amend its Code of Banking Practice to include that “banks will work with customers who live in remote areas or who are not adept in using English to identify a suitable way for those customers to access and undertake their banking.”
During the fourth round of royal commission hearings, Nathan Boyle from the Indigenous Outreach Program of the Australian Securities and Investments Commission provided statements, saying: “Sometimes we see financial services [entities] have policies about the types of questions that are asked and they can only ask questions in a certain way, which might not make sense to an Aboriginal person in a remote community.”
Mr Boyle explained that a question like “what number is on the front of your house” would make more sense to people living in remote communities than “what is your street address”.
One case Commissioner Hayne heard about pertains to ANZ Bank’s treatment of an Indigenous Australian mother of three school-aged children who was consistently being charged dishonour and overdrawn fees (average of $200 per month) that she could not afford, despite communicating her intention to open a fee-free bank account.
Save the Children family support worker Thy Do, who was looking after the mother of three, said what she took away from the experience is that there are “particular cultural, language, geographical barriers that are experienced by Indigenous consumers in and around Katherine [Northern Territory] that, perhaps, weren’t taken into consideration by ANZ staff members”.
As such, Commissioner Hayne has also recommended that the Banking Code include that “if a customer is having difficulty proving his or her identity, and tells the bank that he or she identifies as an Aboriginal or Torres Strait Islander person, the bank will follow AUSTRAC’s guidance about the identification and verification of persons of Aboriginal or Torres Strait Islander heritage”.
Further amendments the commissioner proposed include that without obtaining “prior express agreement” from the customer, banks will not allow informal overdrafts on basic accounts, and further, banks will not charge dishonour fees on basic accounts.
After experiencing “disappointment and frustration” towards the final report, the First Nations Foundation said it is taking matters into its own hands and is calling on the financial sector to work with the foundation to provide Indigenous Australians “the skills they need to be fully included in Australia’s financial system”.
“It’s time to service the underbanked and it’s time to invest in financial education for First Nations people,” Ms Young said.
“It is the responsibility of the banks to make this happen and we can ignite the change to help them improve financial wellbeing for nearly 700,000 people.”
The government last year launched the 2018 National Financial Capability Strategy to help Australians “better control their financial lives” by improving their skills in: managing money day to day, making informed decisions, and planning for the future.
ASIC chair James Shipton in August made particular note of the need to improve the financial capabilities of Indigenous Australians and help them access appropriate financial products and services.
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Tas Bindi is the features editor on the mortgage titles and writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.