David Tennant and Gerard Brody examine the somewhat murky evolution of the cashless debit card system and what the future holds.
At the end of October, a minor but important change was made to the cashless debit card (CDC), which controls how some people access Social Security payments.
The Indigenous-owned, Northern Territory-based Traditional Credit Union (TCU) has grown into a CDC issuer. Until then, the only issuer was a boutique financial service provider, Undue Limited.
Ann Ruston, Minister of Families and Social Services, welcomed the participation of the TCU as a way to “increase banking options for cashless debit card participants in the North territory”.
Supporting the participation of Aboriginal and Torres Strait Islander people in the provision of financial services is important and positive. Allowing participants in some regions to choose between two providers is still far from a real choice, however, as the CDC is designed to reduce normal consumer rights and protections.
Department of Social Services (DSS) says CDC is the same as any other savings account with TEF access. The DSS also claims that participants are covered by “All standard consumer protection laws”.
Do these statements tell the whole story? The laws that regulate banking services in Australia suggest not.
The ASIC Act of 2001 sets out the rules relating to unreasonable behavior and protection of financial services. CDC and the linked passbook are financial services under the law.
At least one existing protection of the ASIC Act has been bypassed to allow CDC testing of proceed. The Commonwealth determined the locations where the map would work and the categories of beneficiaries who must have one.
DSS provided the names and addresses of the required participants to its business partner, Indue Limited. Indue opened accounts and sent people identified by DSS a card with details on how to use it.
Section 12DL of the ASIC Act prohibits the sending of credit or debit cards unless consumers ask them. The layout reduces the potential for push selling and makes it more likely the cards only go to those which are intended. There are some exceptions – like sending replacements for expired cards, although none apply in this case.
Indue asked ASIC for a “no action” letter; fundamentally a commitment that the regulator does not take action in the event of a breach of the law. ASIC agrees, with its reasons, including political decision, the experimental nature of the approach and Indue’s agreement to comply with the terms of the ePayments Code.
The government later decided to extend the trials and then declared them over – meaning previously issued CDCs would continue without a defined end date. Questions about non-ASIC Section 12DL compliance were raised during a 2020 Senate inquiry in the extension of the cashless debit card to the Northern Territory.
After this investigation, the DSS made a new request to the ASIC to excuse the unsolicited sending. cards. Apparently, the DSS made the request rather than Indue to reflect an intention to expand the list of service providers who can open accounts and issue cards.
There was another important difference between this and the first request for relief in 2016. Cards were no longer mailed with the first letter. Instead, Indue has now invited attendees to arrange for their CDC’s collection, or to request that it be displayed.
ASIC provided the second “no action” letter, but concluded that it was no longer needed. In From ASIC’s point of view, Section 12DL is limited to sending cards, not issuing them. Compliance with the law has been technically achieved, but in a way that looks more like a workaround.
There is another relevant section of the ASIC law that helps assess whether the CDC is the same as any EFT account. Article 12DJ prohibits harassment or coercion in the provision of financial services.
In the 2001 Federal Court case ACCC v The Maritime Union of Australia, Hill J. found that coercion “… involves the connotation of force or compulsion or threats of force or compulsion denying choice or liberty. to act ”.
The DSS indicates that the participants choose to activate or not the card. Choose not to do it, the locks lose 80 percent of their benefit income. The quarantined revenues accumulate in the participant’s account, but they cannot access or use it, thus voiding the “choice”.
The government is not required to comply with ASIC law, so although it is coercive, the behavior is not illegal. The card issuer must comply with the law, but it does not force it, just complies under its service contract with MAS.
Some benefit recipients in the Northern Territory may already choose whether or not to accept a CDC but not if their benefit income will be managed under conditions set by government. You can choose between the CDC or the government-issued Basics Card.
Now these people also have the choice between TCU and Indue if they opt for CDC. Although positive, this “choice” has nothing to do with the free selection of a savings account based on your needs and your means and using the funds as and where you want.
Government ministers continue to promote CDC expansion for greater benefit beneficiaries, which could affect more than 2 million Australians. If the CDC is to become more than a compliance tool, options and choice will have to mean more than the government withdraw rights because he can, or provide a culturally appropriate veneer to a fundamentally coercive policy.