The release last week of a damning report by Australia's financial corporate watchdog was evidence of a systemic issue in the banking sector and how it views its social licence to operate.

The Australian Securities and Investment Commission warned its monitoring of all banks would continue, with further action not ruled out, after revealing banking customers unfairly charged high fees were owed refunds totalling $60 million.

ASIC's Expanding Better Banking Outcomes report highlighted in detail the harm caused by dishonour fees, overdrawn account charges, and other penalty related costs, with these fees disproportionately affecting people who can least afford them, including from banks with a large First Nations customer base.

The watchdog's review of 21 banks found 800,000 customers were eligible for refunds, a figure set to rise as some refunds are eligible from more than a decade ago, with ASIC finding the banks had incorrectly charged low-income earners who receive Centrelink payments, such as JobSeeker and Age and Disability Support payments.

First Nations Foundation managing director Leah Bennett – a former financial crime analyst for some banks included in the report – said it was incumbent upon banks to rapidly scale up their investment in initiatives that reduce harm and improve outcomes for vulnerable customers.

"Australian banks are among the most profitable in the world," Ms Bennett said.

"The big four banks have averaged a combined profit of roughly $30 billion in each of the last three financial years.

"It is deeply concerning that a portion of these profits have come at the expense of some of our most vulnerable communities."

The ASIC report comes only 12 months after the regulator found four of the country's banks with a large cohort of First Nations customers had caused "financial distress".

The Commonwealth Bank, Westpac, Bendigo Bank and ANZ knowingly kept more than 150,000 Indigenous customers in high-fee accounts, despite them qualifying for an account with minimal charges.

That ASIC report 12 months ago led to a promise of $33 million in refunds and Ms Bennett said although some banks have taken steps and are continuing to address these issues, their "overall reactive nature of these responses" was disappointing.

"Rather than proactively identifying and mitigating risks, many institutions only take corrective action once harm is already evident," she said.

"What's most troubling is this is not a case of one or two banks failing, it's a systemic issue.

"The fact the report does not single out a particular bank reinforces these practices are widespread ... and points to a deeper problem in how the banking sector views its social license to operate."

The ASIC report found some banks had made progress to "better understand First Nations customers".

Distance barriers and the digital divide still made banking difficult for a majority of First Nations customers in remote and regional communities, and gleaning information from financial institutions on their eligibility for refunds was just as difficult, with customers unsure if and what they were entitled to, and many unaware of ASIC's refund direction.

Some institutions had employed more interpreters designated to customer care helplines, while cultural awareness training for staff at some banks had improved, although more could be done, according to financial counsellors.

Ms Bennett told the National Indigenous Times that Indigenous and other marginalised clients deserved the same level of service banks gave non-First Nations customers.

"Moving forward, banks have a significant opportunity and arguably an obligation to use their profits to meaningfully address the structural issues within their systems," Ms Bennett said.

"This includes undertaking a holistic review of internal processes, strengthening safeguards, and embedding accountability measures that prioritise the wellbeing of customers, not just shareholder returns."

Last week's findings from ASIC confirmed ANZ would commit to return $47.9m it owed in refunds, Westpac more than $9.9 million, and eligible Bendigo Bank customers a share of $155,000.

But the corporate regulator said Commonwealth Bank – including subsidiary Bankwest – would not refund $270 million it had charged low-income customers between July 2019 and October 2024, committing instead to transferring 1.5 million eligible clients to a "new nominal fee account" yet to be approved.

"That will address problems going forward for those people, but what it doesn't do is set things right for the fees they've been charged in the past," ASIC commissioner Alan Kirkland said.

While Westpac and Bendigo Bank did not provide official responses to ASIC's report, an ANZ spokesperson said the bank had implemented measures to improve banking for First Nations clients since ASIC's first report 12 months ago.

"We believe an expansive approach to remediation is the right thing to do," a spokesperson said.

CommBank said it had already repaid $25m in relation to ASIC's first report on "a goodwill basis", with its comments coinciding with a celebration in Sydney recognising 10 years operation of its Indigenous Advisory Committee, and the launch of its FY26-28 Reconciliation Action Plan.