Corporate regulator slams banks’ school marketing schemes as CHOICE calls on State and Territory Education Ministers to ditch Dollarmites.
This is a CHOICE Media Release
“CHOICE welcomes ASIC’s comprehensive review into school banking programs. This is the first time ever in over a century that these school-based marketing schemes have been reviewed,” says CHOICE CEO Alan Kirkland.
“ASIC has painted a damning picture of school banking programs, making it clear that a key objective of programs is to recruit customers at a young age.
“ASIC found that banks like the CBA fail to be transparent about their commercial objectives, and haven’t even bothered to evaluate the effectiveness of their programs.
“Most importantly, ASIC has warned school communities not to rely on claims that these programs help kids to develop good savings habits, describing these as ‘unsubstantiated’.
Put simply: these programs exist to capture lifelong customers,” says Mr Kirkland.
“We know that long-term, loyal customers pay more than other customers, so the most important lesson we can teach young people is to shop around. Encouraging them to sign up to one of the big four banks at a young age is just about the worst thing you could do.”
Four key takeaways of ASIC’s review:
1. There is no evidence that school banking schemes improve the savings habits of participants. ASIC called bank advertising about improving savings habits “unsubstantiated.”
2. ASIC found these programs are a “marketing exercise for the financial institutions that offer them.” Banks use rewards and prizes to “develop attachment to brands.”
3. Payments from banks for involvement in a school marketing scheme creates a “conflict of interest” that incentivises schools to encourage more participants.
4. CBA is now the only major provider of school banking left, with over 92% market share. Bendigo and Adelaide Bank, IMB and South West Credit have wound up their school banking programs as a result of the ASIC Report and Northland Inland intends to wind up its program.
“We welcome other providers like Bendigo and Adelaide Bank winding up their school marketing programs in light of this ASIC review. That is the ethical thing to do. CBA should follow their lead and stop paying money to schools to get them to sign up primary school children as customers,” says Mr Kirkland.
CHOICE welcomes Victoria’s recent announcement banning school marketing schemes from schools.
“The evidence of harm to our children and the Australian community is clear. We are calling on the States and Territories to follow Victoria’s lead and ban bank marketing schemes from their schools. We need evidence-based financial literacy programs that help our kids, rather than setting them up to be ripped off later in life,” says Mr Kirkland.
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