I'm keen to try out the Acorns app but have heard that it breaches the terms and conditions of your internet banking, as you have to hand over passwords. If banks are going to stop people accessing these types of innovations, shouldn't they be offering a similar alternative? If I sign up, does that mean I wouldn't be covered for fraud?
Bernie, Moonee Ponds
Yes, technically. However, it would be a bold bank that would hang you out to dry if there was unauthorised access to your accounts, merely on the basis of using one so-called fintech app.
Such apps that tap directly into your net banking are the way of the future and bank bleating about broken T&Cs; is just a stalling tactic.
For those who don't know, Acorns is an app sweeping the lucrative Millennial market that lets you invest your "virtual" spare change in a diversified portfolio of your choice. It does this by rounding up your transactions on a nominated credit or debit card to the nearest dollar, and automatically shifting each accrued $5 from your account directly into your portfolio.
You can still use the app without giving out your password, but you won't be able to use the round-up feature. You'll have to set up a direct debit.
I'd be more concerned about paying the $15 annual fee, Bernie, IF you end up investing less than $750 a year. That pushes it above 2 per cent, which is how this app stands to make a lot of money.
Recently I overheard an elderly man ask a bank employee how to cancel a direct debit authority. Despite his distress at having $200 per month deducted from his account by a charity, he was fobbed off. What are customers' rights in such circumstances?
Lindsay, Southern Sydney
You don't say which bank Lindsay, but that's bad service – and possibly unconscionable on the charity's part. Recently there's even been a case of someone cancelling their credit card to stop gym direct debits.
It shouldn't ever be this difficult though. Consumer Action tells me if the transaction was unauthorised, his financial institution is required to refund the money under the ePayments code. And if it's a mistake by the customer, he should check for any cooling-off period.
Consumer Action's Jonathan Brown says that under Australian Consumer Law, "It's common for people to cancel direct debits while a contract or service is in dispute. Staff at the bank may tell you that you can't cancel a direct debit, but this is not true." Legally they must comply with a written request.
Unfortunately, you have to cancel credit card direct debits through the company. But keep records of your request; if it doesn't comply, you can ask your bank to cancel it as an unauthorised transaction.