Australia’s largest bank has been forced to put on hold plans to charge some customers to access their own cash.

The Commonwealth Bank said on Wednesday it would pause a plan to charge some customers $3 to take cash out from bank branches, post offices or over the phone.

It follows outrage from both sides of politics, with Assistant Treasurer Stephen Jones labelling it the “worst Christmas ever” when it was announced on Tuesday.

On Wednesday, federal Treasurer Jim Chalmers joined the condemnation, describing the plan as “unacceptable”.

“We made our views very clear in the course of the day yesterday. The changes that were flagged and that were announced are not acceptable or appropriate,” he said.

Chalmers said he had expressed his view to CBA boss Matt Comyn.

“We are talking, in lots of instances, about some of the most vulnerable people in the banking system. I welcome the change of heart,” he said.

“People are doing it tough enough as that is and they do not need this at Christmas or any other time.”

This is BS. Change bank if you’re with Commonwealth.

Aussies hit with $3 cash withdrawal fee. https://t.co/z3szgg9TWO

— Elizabeth (@LizMountford) December 2, 2024

In a move widely blasted as greedy and out of touch, the bank said on Tuesday it would shift all customers from its Complete Access accounts to Smart Access accounts, which have “assisted withdrawal fees” of $3 for many withdrawals. Using an ATM is not affected.

The fee would not apply to age, service and disability pensioners, those aged under 18 and people with disabilities that require them to use branches.

On Wednesday, in a snap media conference, CBA head of retail banking services Angus Sullivan apologised for poor communication of the decision.

“We feel that we didn’t get the communication right on this, and we want to take a more individual approach,” he said.

He said Comm Bank would delay the shift to Smart Access accounts for six months for about “10 per cent” of its customer base who used the assisted fee withdrawal service, or would be “worse off” from the changes.

The remaining 90 per cent of Complete Access customers would be a “better position” with the new account, Sullivan said.

He denied pressure from the federal government was behind the backdown.

“This is based on us listening to our customers and making sure that we do the best that we can by them,” he said.

If the Commonwealth Bank impose a fee, decided by them, to access my own money how is that not extortion?

— bradpsychology (@bradpsychology) December 3, 2024

‘We don’t need this’

Wednesday’s backdown followed a rapid pile-on from many politicians, who had pushed for the fee change to be reconsidered.

“People understand there’s some charges relating to banking transactions, but this seems pretty extraordinary to have a charge of this size for a simple transaction of going into a bank and withdrawing your own money,” Finance Minister Katy Gallagher told Nine’s Today program on Wednesday.

Fellow Labor minister Clare O’Neil said the move was a “kick in the guts”.

“Everyone’s had a bit of a tough year on the cost-of-living front … come on guys, it’s Christmas, we don’t need this right now,” she told Seven’s Sunrise.

The bank said fees on the Smart Access account, its main transaction account, had not changed and it continued to offer withdrawal fee waivers for eligible customers.

The CBA’s move follows similar steps by its competitors, including Bendigo and Adelaide Banks, which introduced a $2.50 fee for branch withdrawals of cash in October.

Commonwealth Bank to charge users $3 per transaction to withdraw their money- in a branch. Disgusting greed and gouging. @AlboMP

— Hugo’s mother (@VirgonaIngrid) December 3, 2024

Liberal senator Jane Hume said customers would vote with their feet and close their accounts – including herself.

“I have a Commonwealth Bank account I’ve had since I was at university. I will be shutting it because of this decision,” she said.

“I don’t know whether it’s a Complete Access account or not [but] it’s a bad decision and I will be shutting my account.”

On ABC TV, another Coalition frontbencher, Ted O’Brien, added his criticisms. He said he’d recently dealt with the effect of the CBA closing a local branch and was worried the latest change would hit the same customers.

“I’m thinking about those same senior citizens who are struggling because, all of their life, they’ve become accustomed to walking into a branch,” he told News Breakfast.

“I think, for them to be stung by $3 is certainly worthy … of a serious rethink on behalf of the bank,” he says.

Independent MP Monique Ryan said the move showed cash was under threat in Australia.

The government recently announced a proposed mandate for businesses such as supermarkets, pharmacies and petrol stations that sell essential items to accept cash payments.

About 94 per cent of businesses accept cash, a fall from 99 per cent before the Covid-19 pandemic.

-with AAP