Victorian government will ban school banking programs delivered by financial institutes in public schools from 2021, replacing them with government-led programs for financial literacy education. While welcomed by consumer advocates, politicians and financial institutions questioned the decision for taking away a decades-old option from schools and families.
In the announcement on Nov. 29, the Andrews government noted that there was little evidence to suggest school banking programs taught students lasting habits that improved financial literacy. They also cited serious concerns over banks predatory behaviour toward children from loyalty programs, the promotion of credit cards to primary school students, and unfairly low-interest rate that compromised the education around compound interest and saving money.
“Victorian students deserve high-quality financial literacy, free from commercial interests—that’s why we’re banning financial institutions from delivering school banking programs,” Victorian education minister James Merlino said.
“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,” he said.
Merlino said the government would introduce new teaching resources from next year to replace “low-quality activities run by external organisations trying to find new customers.”
The move comes after the Australian Securities and Investments Commission (ASIC) to initiated a review of school financial literacy programs in late 2018 after ongoing concerns over the programs were raised after the Commonwealth Bank’s 80-year-old Dollarmites was embroiled in a series of scandals.
Reactions Are Divided
The announcement has received divided reactions.
Leading consumer group Choice welcomed the decision as a manifestation of government’s commitment to genuine financial literacy programs, and called for other states to follow Victoria’s lead.
“Programs like the Commonwealth Bank’s Dollarmites are little more than slick marketing programs aimed at primary school-aged children,” Choice chief executive Alan Kirkland said in a statement on Nov 29.
Kirkland noted that a 2017 survey demonstrated that 46 percent of people got their first account with Commonwealth Bank, but only a third kept this account into adulthood.
“That shows the real value of Dollarmites – it is an extremely effective marketing scheme,” he said. “If we want children to develop financial literacy, this should be through evidence-based education, free from advertising.”
However, David Limbrick, Victorian Liberal Democrats MP for South Eastern Metro region described the decision as ridiculous. Limbrick noted that he believed the Andrews government was overreaching again by taking away choices from parents.
He also said teaching kids important money-management lesson through these programs was a decades-long tradition in Australia.
“My kids loved being able to save money in a real bank account and log into an app to see it grow and buy things they want,” he told the Epoch Times in an email on Dec 2.
Despite the controversy surrounding some programs, the father of three argued that the critical point was “no child is forced to use school banking” and there was nothing wrong to offer options to parents.
He also held that kids should be taught about the real world. “We should not be afraid to teach our kids about the world around them, including banks,” he said.
Frank Restuccia, the founder and director of Finder, a leading comparison website in Australia, supports creating more channels to help children develop their financial skills.
“Kids need to be taught practical money skills, and frankly there is more that can be done,” he told the Epoch Times in an email on Dec 2.
When it comes to transaction or savings accounts, he said it was essential to present kids the options available to them. “Ultimately, product comparison needs to be part of the school curriculum so comparing accounts side-by-side and finding the best deal becomes second nature,” he added.
Commonwealth Bank Will Refine the Programs
In response to the decision, a spokesperson for the Commonwealth Banksaid said they were “surprised“ and “disappointed”, noting this will impact more than 100,000 Victorian students across more than 500 schools.
“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 told the Epoch Times in an email on Dec 2.
He also said the bank had been refining these programs to incorporate the initial findings of the ASIC review and would continue their efforts to cater to the changing needs of youth financial education.
“We will continue working with ASIC and gaining inputs from academics, behavioural scientists, education experts, parents, school community and children to evolve our program to focus on supporting youth financial literacy, consistent with the school curriculum.”