ASIC slams school banking programs as 'persuasive advertising'


The Australian Securities and Investment Commission (ASIC) has slammed school banking programs for being marketing campaigns with no educational benefit. And they could be costing your kids hundreds in earned interest.

In its review of school banking programs, released yesterday, ASIC found the programs:

1. do nothing to improve the short- or long-term saving habits of account holders, despite providers claiming that participation leads to an increased understanding of money and savings;

dollarmites school banking programs banned from classrooms

2. are persuasive advertising strategies to develop brand loyalty, despite students having little or no ability to filter marketing messages;

3. fail to disclose their strategic objectives to acquire customers;

3. and create a conflict of interests through the kickback payments to schools in order to incentivise participation.

The findings been welcomed by consumer advocacy groups.

"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," says CHOICE CEO Alan Kirkland.

"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'."

Sally Tindall, research director at, says the report exposes the weaknesses of letting banks into our schools to teach our kids about money.

"School should be a safe environment where kids aren't exposed to financial marketing and advertising," she said.

"If McDonald's came into schools to teach kids about healthy eating there would be an outcry. When it comes to teaching kids about money, parents and teachers should be taking the reins.

Tindall believes financial education should be included in schools' core curriculum.

"Learning about money is a life skill but right now it's buried in the curriculum. It should be a stand-alone subject," she says.

"School banking is a convenient way to get your kids to learn about banking, but parents can easily do this at home without being forced to use one specific provider."

Failure to shop around could cost students thousands come adulthood.

Financial educator Nicole Pedersen-McKinnon has developed an interest integrity index which calculates the difference in interest rate between the average big four and the best product in the market, across the average Aussies' credit card, personal loan and home loan.

These interest rate differentials add up to an estimated $150,346.

So what youth saving accounts generate the biggest returns? has crunched the numbers of 25 kids' accounts to see how much interest they earn when a child deposits $10 a week into the account from kindergarten through primary school.

It found that when factoring each product's terms and conditions, the highest interest rates didn't necessarily turn into the biggest returns. The account with the highest interest rate (LCU) ranked last in terms of interest earned due to onerous terms and conditions.

RateCity also found that CBA's Youthsaver ranked 22nd in terms of rate and 21st in terms of interest earned. At the other end of the spectrum, CUA's Youth eSaver earned the most interest over the seven years from kindergarten to year six.

"CBA's YouthSaver is offering a rate of just 0.80% - parents can teach their kids to do better than this by shopping around," says Tindall.

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David Thornton was a journalist at Money from September 2019 to November 2021. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.
Steph Kachel
December 19, 2020 10.02am

Fantastic news about CBA being removed from some states schools, just need it to be all.

However, parents cannot teach financial awareness when they don't have it themselves.

My parents couldn't teach me much as they didn't know too much, it was my own miserliness that eventually taught me.

I Spent my 20s & 30s, working, wasting, and travelling Australia and the world and by 32yo had very little to show for my life.

Now at 60yo and having a wonderful husband who gave me free rein, I made a couple of managed fund investments and although we have transferred throughout Queensland due to his job we have paid off a couple of houses and looking forward to a comfortable retirement.

Not only that but I also educated my kids now 25yo and 22yo, both are investing together and separately- the youngest has a portfolio worth almost 100,000 after working and studying for 3 years and the older one has cash and portfolio of approximately 80,000 after working for 2years after studying and travelling the world for 5 years - I am so proud of them. All of this WITHOUT dollarmites.