CHOICE calls for ban on school banking kickbacks
CHOICE is calling for state governments to rein in the activities of banks in public schools, arguing that children are being exploited by brand-awareness campaigns.In its submission to the Productivity Commission's inquiry into banking competition in Australia, CHOICE asserts that banks are targeting primary school children under the pretence of promoting good saving behaviour.The consumer advocate claims the practice of banks teaching primary students about money management was the equivalent of letting Ronald McDonald "lecture them about the importance of a balanced diet". "School banking programs allow banks to provide their services to primary school children on school grounds, under the guise of promoting financial literacy and good saving behaviour," the peak consumer advocate argues in its submission."The benefits to the bank are significant, as they can collect new customers, expose them to the brand and cement a relationship with them from a young age."CHOICE is particularly irate about Commonwealth Bank's school banking program, which offers financial kickbacks to schools for each student that opens a Dollarmite account.CBA pays schools a $5 upfront commission for each new activated account and five per cent trail commission on every deposit made at the school."These payments have nothing to do with altruism - they're clearly tied to the sale and promotion of Commonwealth Bank products," CHOICE told the inquiry."The Dollarmites program provides an immediate commercial benefit to the bank and, more importantly, a lucrative long-term benefit as many people keep their first account."The consumer advocate wants a ban on all financial kickbacks.CHOICE argues that CBA operates as a monopoly in the school banking market.Around 326,000 children aged under 12 have Dollarmite accounts - which equates to around 14 per cent of the age demographic across Australia.