The corporate watchdog is to investigate school banking programs, amid increasing concerns about the vested interests of the banks in schemes they say are designed to education children about money.
ASIC announced its review of the primary school programs on Thursday.
“Transparency around school banking programs is important,” deputy chair Peter Kell said.
ASIC wants to understand the motivations and behaviours around school banking programs to ensure they ultimately serve the interests of young Australians, and to enable school communities to have an understanding of the potential impact of these programs.”
The investigation comes weeks after the Commonwealth Bank’s Dollarmites club, which has operated across Australia for decades, was singled out at the banking royal commission for exploiting its program to market its brand to kids.
Earlier this month, Queensland’s Department of Education was forced to reveal to the ABC that the CBA had paid it $400,000 to run the Dollarmites program in the state’s schools.
ASIC said financial literacy education was a vital part of the Australian curriculum, ensuring children learned about the value of money, the cost of living, compound interest, how to identify a scam, choose a mobile data plan and start a business.
“It is essential that young people develop the knowledge and the skills they need to engage effectively with financial products and services,” it said.
“Attitudes and behaviours around money can be shaped from an early age and education is a key component to support stronger financial capability and to better prepare young people to manage financial decisions throughout their life.”
What is school banking?
School banking programs allow banks to offer deposit accounts to students.
These students are encouraged to open accounts and make ongoing deposits into their accounts at the school.
Banks say the programs promote the importance of savings. But critics say giving unfettered access to kids through Dollarmites allows the CBA an unfair advantage of holding on to them as potential customers into adulthood.
One Victorian customer told The New Daily that their child received a platypus-shaped piggy bank, chocolates and lollies in the welcome pack after signing them up to the program.
Dollarmites was recently named among the winners of Choice’s 2018 Shonky awards.
ASIC’s review will investigate how the programs are marketed to schools communities, how students engage with the programs at school and after graduation, and assess the programs’ benefits and risks.
Mark Jones, general manager of the Commonwealth Bank’s retail arm, said the bank fully supported initiatives that promoted financial literacy.
“We welcome the announcement by ASIC to review school banking programs in primary schools,” he said.
“Participation in CommBank’s 87-year old school banking program is voluntary for schools and parents.
“CommBank does not charge fees or market credit products to any customers under 18 years old.”
The review is expected to be complete by mid-2019.
The New Daily has asked ASIC for a full list of school banking programs under review.