Remember those mustard yellow Dollarmites bank books friends waved in front of each other in the classroom?
Well, the Victorian government will outlaw those wallets in public schools from next year after it cracked down on “low quality” banking programs that have “little evidence” of improving children’s financial literacy.
The government raised concerns school banking programs “developed [students’] trust” in low-interest savings accounts, despite other products with higher rates of compounding interest on the market.
And it also suggested high-interest credit cards were also “inappropriately promoted” to primary school-aged children.
Instead, the programs – which were pilloried by consumer advocates as “marketing masquerading as financial literacy” – will be replaced by programs taught alongside existing maths and economics curriculums.
The ban will be effective from Term 1, 2021, with teacher resources to be produced in consultation with financial experts.
According to a consultation paper into school banking released by the corporate regulator ASIC last year, nearly two-thirds of Australian primary schools partake in the controversial programs.
That same paper also hinted there was “limited evidence” schemes such as Dollarmites encouraged schoolchildren to develop good “lasting” savings behaviour.
However, ASIC did find “school banking increases the chances of a participating student remaining with the ADI (authorised deposit-taking institute)” – rather than improving students’ financial know-how.
The rate of brand loyalty fostered by school bank programs was recently revealed by The New Daily, with consumer comparison website RateCity finding nearly half of all adults who participated in the programs still remained with their first provider.
Victorian Education Minister James Merlino said the state government was focused on building more teacher-led financial literacy programs into the school curriculum.
“Victorian students deserve high-quality financial literacy, free from commercial interests – that’s why we’re banning financial institutions from delivering school banking programs,” Mr Merlino said.
“It is time to draw a line under this issue.”
A Commonwealth Bank spokesperson said in a statement the move would reduce the bank’s investment in financial literacy programs by $4 million, and would affect more than 500 participating schools.
“This will have an impact on thousands of children, families, school communities and volunteers, right across the state,” he said.
“We will be supporting our impacted teams and school partners across Victoria and determining what this means for them going forward.”
The spokesperson also said CBA had been “engaging constructively with the ASIC review” since its publication, and had adjusted aspects of the program since the findings of ASIC’s preliminary report.
CEO of consumer advocacy group Choice Alan Kirkland welcomed the government’s rejection of “slick marketing programs aimed at primary school-aged children”.
Choice, which handed Commonwealth Bank a Shonky award for paying schools commissions to participate in the Dollarmites program in 2018, found 46 per cent of school-aged children got their first bank account with the big four firm.
“Choice has never been able to find any evidence that programs like the Dollarmites have any impact on long-term savings habits,” Mr Kirkland said.
“The only impact they have is to give the Commonwealth Bank a steady stream of young customers, many of whom stick with the Commonwealth later in life.”
Mr Kirkland also called on other jurisdictions to follow Victoria’s lead and ban school banking in their public schools.