👉 Background: ANZ, Westpac and Bendigo Bank are among Australia’s largest retail banks in Australai - selling everything from bank accounts to mortgages as well as business lending across the country. These banks have more than 20 million customers combined. In July last year, the financial watchdog ASIC released a report revealing unreasonable bank fees charged to vulnerable Aussies.

👉 What happened: After digging a little deeper, ASIC found that the fee-issue turned out to be much more widespread, affecting around 770,000 low-income customers. ASIC argues that the banks didn’t act fairly and ethically in charging these fees - especially with many of these customers on Centrelink and being pensioners, and not using many of the account features.

👉 What else: So now, the banks are coughing up nearly $60 million in refunds… with ANZ issuing the biggest refund at nearly $48 million. This is on top of $33 million they’ve already refunded. This is the challenge of  one-size-fits-all products that rely on customers cross-subsidising each other.

What's the key learning?

💡Cross-subsidisation is when a company charges many customers the same flat fee, regardless of how many of the features they use. That means some customers end up paying more than their fair share to cover the costs of others.

💡In the case of banks, high-fee transaction accounts often include branch access, ATM withdrawals and overdraft facilities. These are expensive for banks to maintain. Rather than pricing each feature separately, banks apply a flat fee to everyone… including customers who rarely (or never) use those services.

💡Now, the banks are moving over more than 800,000 customers to lower-fee accounts which will save them $40 million annually.