QLD gov says goodbye to Dollarmites in school banking shake-up

Queensland has become the latest state to announce a ban on bank-led school banking programs, including the Commonwealth Bank’s well-known ‘Dollarmites’ program.

The move, which was announced last week by Queensland Minister for Education, Grace Grace, was in direct response to the Australian Securities and Investments Commission’s (ASIC) December 2020 Review of school banking programs .

In the review, ASIC put forward a number of findings which were critical of school banking programs. Those included that:

• Providers couldn’t demonstrate claims that their programs actually helped develop and improve children’s savings habits

• Young children are exposed to ‘sophisticated’ advertising and marketing tactics by the program providers

• Providers fail to ‘effectively disclose’ that one of the objectives of these programs is acquiring customers

In a statement, Minister Grace said the decision was, “...in the best interests of students”, and noted that things had changed dramatically in the 50 years since school banking was introduced.

“Our young people are growing up in a world where money can literally be at their fingertips with a wave of their watch or tap of their phone. Schools are now giving them skills to help manage their money responsibly while being cybersafe and avoiding the potential pitfalls modern technology can bring.”

“Students from Prep to Year 10 are taught the Australian Curriculum and teachers use the ‘MoneySmart’ resources to tailor lessons to suit different age groups — from counting money and saving up for a teddy bear’s socks to understanding the hidden costs of a mobile phone contract.”

It appears that the announcement will impact the Dollarmites program the most, as Grace noted that around 560 schools in the state have programs with the Commonwealth Bank.

According to Grace, the Queensland Department of Education’s existing agreement with CBA would not be renewed in July, though she noted that the roughly 38,000 students who have Dollarmite accounts would still be able to keep them in a private capacity.

A spokesperson for the Commonwealth Bank, quoted by the ABC , said the bank was ‘disappointed’ by the decision.

"We engaged constructively with the ASIC review and have been refining our program in response to its findings, with submissions from communities, schools and individuals right across the country showing significant support for school banking.”

Do Australians support school banking programs?

As mentioned on The Finance Burrito podcast, Queensland is not the first state to go down the path of banning bank-led programs from schools. Victoria was the first state to announce a ban in November last year, followed by the ACT in February.

But do Australians' attitudes towards these programs actually match up with the actions being taken by state governments?

As part of nationally representative research conducted by Researchify on behalf of Mozo  for the 2021 Piggy Bank Report, less than a third (30%) of the 2,078 participants surveyed were found to be in support of a ban on school banking programs. That’s compared to 70% who didn’t agree with a ban.

Interestingly, survey respondents from Queensland were the least likely to agree with a ban (22%), while Victorians were found to be the most supportive (36% agreed).

Of those who were in favour of removing programs from schools, the most popular reasons for supporting a ban were: banks shouldn’t be allowed access to kids (37%) followed by banks go on to sell credit products to kids they can’t afford (32%).

RELATED: Ditching Dollarmites: A new way forward in student financial literacy

For more information about kids’ banking and financial education, ASIC’s Moneysmart has a bunch of guides and other resources to help you out, or you can check out some of our own savings account guides.

Interested in finding a new account for your kids? Take a trip to the Mozo kids savings accounts hub to compare fees, features and interest rates on a range of accounts from different banks.