- Victoria is banning financial institutions from offering school banking programs in 2021.
- It comes after concerns raised about the way banks use such programs to lure children into loyalty with them from a young age.
- The Commonwealth Bank told Business Insider Australia it was “surprised and disappointed” by the state government’s move.
- Visit Business Insider Australia’s homepage for more stories.
The Victorian government will stop banks and other financial institutions from bringing banking programs to schools in the state from 2021. In their place will be school-led programs designed to boost financial literacy among students.
The move comes after concerns raised by teachers, families and students about the quality of financial literacy from school banking programs.
According to the state government, there have been concerns about banks using incentives and prizes to lure children into joining with them at an inappropriate age; reports of credit cards being inappropriately promoted to primary school children; and use of low interest rates in these programs, which reduce the benefits of saving money.
On top of that, the state government said “there is little evidence to suggest school banking programs teach students lasting habits to improve financial literacy”.
“Victorian students deserve high-quality financial literacy, free from commercial interests – that’s why we’re banning financial institutions from delivering school banking programs,” Education Minister James Merlino said in a statement. “The Victorian curriculum sets our expectations for financial literacy and that must be our focus. It is time to draw a line under this issue.”
Financial literacy skills are offered through the curriculum in subjects such as maths, business and economics. Instead of having school banking programs, the state government will roll out new teaching resources and give students tips on tax and how to avoid scams. These will be done in consultation with financial experts.
Consumer advocacy group Choice said it supports Victoria’s move and called on other states and territories to follow in its footsteps. It particularly called out Commonwealth Bank’s Dollarmites program, where children can save money into a particular account and earn Dollarmites tokens. These tokens, in turn, can be used to redeem rewards.
“Programs like the Commonwealth Bank’s Dollarmites are little more than slick marketing programs aimed at primary school aged children,” Choice CEO Alan Kirkland said in a statement.
“Choice research in 2017 found that 46% of people got their first account with Commonwealth Bank, and a third kept this account into adulthood. That shows the real value of Dollarmites – it is an extremely effective marketing scheme.”
“Choice has never been able to find any evidence that programs like the Dollarmites have any impact on long-term savings habits. 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.”
In 2018, Choice gave the Commonwealth Bank a Shonky Award for using the Dollarmites program to enter schools.
“Marketing programs like this have no place in schools,” Kirkland said. “If we want children to develop financial literacy, this should be through evidence-based education, free from advertising.”
Commonwealth Bank is ‘disappointed’
Commonwealth Bank Australia (CBA) expressed disappointment at Victoria’s decision to axe school banking programs.
“We are surprised and disappointed with this decision by the Victorian Government,” a CBA spokesperson told Business Insider Australia via email. “This will have an impact on thousands of children, families, school communities and volunteers, right across the state.
“We have been engaging constructively with the ASIC review, refined our program to incorporate or address the initial findings, with submissions from communities, schools and individuals right across the country showing significant support for School Banking.”
CBA said it doesn’t just have its Dollarmites program – it has another financial literacy program it offers schools as well.
“In Victoria, this decision will mean the loss of around $4 million in financial literacy programs and school contributions, provided by School Banking and StartSmart – CBA’s financial literacy program,” the spokesperson added. “These programs support the financial literacy learning of more than 100,000 Victorian students across more than 500 schools that volunteer to participate annually.
“We will be supporting our impacted teams and school partners across Victoria and determining what this means for them going forward.”