Chapter 5Protecting the future of regional banking

5.1Multiple inquiries have investigated the issue of bank branch closures over the last three decades, but they have not stopped the pace of branch closures. As outlined in previous chapters, Australia's major banks continue to close branches with little regard to wider community impact.

5.2Throughout this inquiry, the committee has travelled to many parts of Australia, visiting towns impacted by, or threatened with bank closures. The committee has been struck by the depth of community concern, the feelings of disappointment and anger, and the consistency of the messages from regional Australia—people feel abandoned and disrespected by the banks.

5.3The people who live in remote parts of our country make significant contributions to the Australian economy. In some cases, such as the Shire of Ashburton, these are very outsized contributions. The committee heard that every worker in the Shire of Ashburton produces almost 11 times the Australian average in value-add—a shire of about 20000 people delivering nearly 12percent of Western Australia's regional gross domestic product. Yet this local government area, larger than some countries, has no bank branch.

5.4People who live in remote areas are also managers and custodians of our land and make important contributions to our environment. They are teachers, nurses, small business owners and volunteers who are the backbone of these small communities—and they all need access to cash to function. There are also vulnerable members of our remote communities who cannot afford or are unable to migrate into the digital age—the elderly, Indigenous Australians, and people living with disability.

5.5The committee heard about the town of Tennant Creek in the Northern Territory, where a bank essentially abandoned a town. A circumstance where a bank not only left but outsourced their responsibilities to a not-for-profit service provider to undertake routine banking services that should rightly be undertaken by a bank. This cannot be allowed to happen again, but also, there needs to be reform to rebuild that capacity which has already been lost.

5.6In this chapter, the committee will detail the evident need for reform to the way Australia's banks are regulated before outlining its recommendations to establish a framework for a more orderly process around proposals to close bank branches in the future. Importantly, this chapter considers how we best protect the future of regional banking.

The need for reform

5.7According to the Australian Prudential Regulation Authority (APRA), bank branch numbers continued to decline over the year to 30 June 2023, with 'a reduction of 424 branches across Australia (11 per cent), including 122branches (7 per cent) in regional and remote areas'.[1]

5.8The launch of the committee's inquiry in February 2023 saw a slowing in the rate of closures. However, according to independent journalist MsDale Webster, there were still:

104 regional bank branches closed since the inquiry commenced on 8February 2023; and

fifteen towns have been 'left completely without banking services', namely: Holbrook, Coober Pedy, Tailem Bend, Carnamah, Smithton, Clifton, Alexandra, Roxby Downs, Jeparit, Biggenden, Tatura, Woolgoolga, Inglewood, Mitchell, and Waroona.[2]

5.9Ms Webster explained that '[a]ll but four of these have been left in this position by [the National Australia Bank (NAB)]', which is responsible for 53 of the 104closures since the committee's inquiry began. Other closures included:

Bankwest (owned by the Commonwealth Bank)—19 branches closed, with plans to close all remaining branches in 2024;

Australia and New Zealand Banking Group (ANZ)—14 branches closed;

Westpac—9 branches closed;

Bank of Melbourne (owned by Westpac Group)—3 branches closed;

Commonwealth Bank of Australia (CBA)—2 branches closed;

St George (owned by Westpac Group)—2 branches closed;

Bank of Queensland—1 branch closed;

BankSA (owned by Westpac Group)—1 branch closed.[3]

5.10Evidence provided by regulators and government departments over the course of the inquiry indicates there is nothing in Australia's current financial legislation or regulatory architecture that could prevent branch closures, and many inquiry participants argued it will soon be too late to act.

5.11Withdrawal of banks from regional communities is negatively impacting economic development and 'starving' regional communities of 'productive capital'. This is happening in Australia and many other jurisdictions, including the United Kingdom (UK) and Spain. Dr Klaus Serr from La Trobe University cautioned that communities facing additional challenges, like depopulation and negative migration patterns, are particularly vulnerable to the impacts of bank closures, including communities in Tasmania, the Northern Territory and parts of Western Australia.[4]

5.12Along with the damaging impacts on regional areas, the Australian Lottery and Newsagents Association (ALNA) submitted that a failure to act to slow down branch closures could lead to a 'significant erosion of the small business landscape in Australia, underscoring the need for a concerted effort to address this de-banking crisis'.[5]

Banking is 'essential'

5.13Across more than 600 submissions and 13 public hearings, a majority of inquiry participants argued that banking is an essential service, like 'healthcare, clean water, and education', and that access to banking services should be protected. Farmers, pensioners, local councils, and regional businesses highlighted the negative impacts of bank closures and called for meaningful national action to reverse the trend.[6]

5.14Per Capita maintained that banks represent 'essential economic infrastructure', without which communities cannot function, and submitted:

Just as we would not leave the creation and maintenance of our health system or our roads entirely in private hands, we should not leave our banking services, financial infrastructure and financial stability entirely in private hands.[7]

5.15AgForce Queensland Farmers Limited (AgForce QLD) commented on the fact that, during pandemic-related lockdowns, banking was classified as an essential service, like grocery stores and post offices. However, this was also a time in which banks invested heavily in their digital services and worked to actively transition customers to digital channels while they continued to close branches.[8]

5.16Submitters argued that the burden of bank closures—especially in regional areas—has fallen on the organisations that remain. The Australian Citizens Party (ACP) submitted:

Small businesses, elderly people and vulnerable Australians who rely on face-to-face banking services are severely impacted by branch closures. When banks abandon regional towns, they burden small businesses, such as supermarkets, which are forced to act as banks to meet their community's cash needs. Banks have also exploited Australia Post licensees, who have historically been paid a pittance to serve all of the banks' abandoned customers.[10]

5.17Despite a broad recognition that access to cash and banking services is essential,[11] submitters suggested banks have been allowed to close branches with little scrutiny or regulatory oversight.

Banks enjoy special protections and face few barriers to closing branches

5.18A number of inquiry participants argued that Australia's major banks enjoy a privileged position—characterised by significant market power and unique, publicly funded protections—without being subject to corresponding regulatory constraints.[12]

5.19Dr Andy Schmulow, Associate Professor of Law at the University of Wollongong, said banks currently enjoy a 'free for all', with nothing to hold them to 'their obligations to communities which have supported them for generations'. Per Capita maintained that existing regulation, monitoring and enforcement has, 'so far, proven ineffective in maintaining standards and protecting customers', and ALNA submitted:

The banking sector appears to most Australians to benefit from a preferential level of protection and support by government, and it has been allowed to remain highly consolidated, leading to economies of scale and consistently high profitability. Yet the systemic issues we are seeing now call for urgent government intervention to ensure that the banking sector serves the needs of all segments of society and meets its social licence obligations, particularly to the small business sector, which is often hailed as the backbone of the Australian economy.[13]

5.20Sharing a view common among local councils and businesses, IsaacRegional Council said that, 'a new profit-focussed model has taken the place of the community focus' among the banks; prioritising profit above all else has led banks to overlook customers and communities that have 'remained loyal to them' for many years.[14] Bank Reform Now suggested that bank executives 'chase short‑term financial returns in ways which can and do cause long term damage to a bank's core business and its customers' financial wellbeing'.[15]

5.21The Western Queensland Alliance of Councils (WQAC) echoed the idea that branch consolidation policies are short-sighted. It pointed to research which indicates an increasing role for 'shared value' and 'purpose driven corporate aspirations'. Under this approach, banks have a role to play in strengthening the economies of whole communities and regions for the long term by, for instance, supporting investment in new technologies, manufacturing and green economic development:

Yet, Australian banks continue to pursue bank closures in regional communities despite the above research suggesting these areas are fertile grounds for shared value opportunities; and despite its Industry Code of Practice stating that banks will 'offer a wide range of options to access banking and financial services'.[16]

Are Australia's regulators 'asleep at the switch'?

5.22Governments in countries all over the world have grappled with this issue for decades, and many have implemented regulatory regimes designed to protect customers and communities by maintaining access to cash and services.

5.23The ACP outlined actions taken by governments in Lithuania, Latvia, Sweden, Finland and France to protect access to cash and cash acceptance,[17] and DrSchmulow described regulatory approaches taken in South Africa and the UK, saying officials in these countries play an active role in monitoring branch distribution and assessing potential closures. According to DrSchmulow, these oversight bodies are empowered to ensure that bank customers 'are treated fairly, and their needs addressed, if and when banks close branches (or remove [automatic teller machines (ATMs)])'. In contrast, he argued that Australia's financial services and consumer credit regulator, the Australian Securities and Investments Commission (ASIC), has 'characteristically, been asleep at the switch'.[18]

5.24Dr Schmulow expressed surprise and frustration at ASIC's decision to focus its submission to this inquiry entirely on the impact of branch closures on First Nations people, saying: 'why the consumer protection regulator would deem itself aloof from the plight of the remainder of Australians affected by branch closures, is inexplicable'.[19]

5.25ASIC was asked to explain why its submission to the inquiry did not address the broader issue of bank branch closures. Commissioner, Mr Alan Kirkland said ASIC had looked at what 'information and work' it had done that might be relevant to the issue of branch closures. Having only considered one case relating to a branch closure—a case around difficulties with identity verification—ASIC determined that its 'Indigenous outreach program' provided the 'greatest volume of information' to assist the committee. Mr Kirkland also highlighted the Banking Code review process, which was currently underway, saying: 'There may be a process, once we've received submissions, where we go back to the [Australian Banking Association (ABA)] and ask it to consider making changes to the code before resubmitting a final version of the code for a formal decision by ASIC'.[20]

5.26Also concerned that regulators are providing inadequate protection for bank customers in Australia, AgForce QLD suggested it is time for 'a government review of our current banking system'. Areview should consider 'the role of banks as essential service providers in our decentralised society', with a focus on the needs of regional and remote communities, where cash is still 'widely used'. Along with stronger regulation, AgForce QLD supported a 'shared banking services model', as implemented in parts of the UK, where banking 'hubs' provide services for multiple banks in one location.[21]

Committee view

5.27It is clear that the current model of banking industry self‑regulation has failed to shelter regional Australia from the damaging impacts of bank branch closures.

5.28There is nothing in Australia's existing regulatory architecture that could stop, or even slow the pace, of branch closures, and there is no regulator that routinely deals with these concerns.

5.29Banks currently have little incentive to retain branches at all, and particularly not in regional areas where usage is lower, and staff are harder to recruit.

5.30Under their current Code of Practice, banks have no obligation to provide face‑to-face services if they do not consider it 'financially viable' to do so—even for their elderly, disabled or vulnerable customers. Banks can, and do, walk away from communities they have served for decades, with little warning and no consultation. This is unacceptable.

5.31Initiatives adopted over recent years have failed to materially change these outcomes. Newly adopted requirements ultimately rely on the good faith of banks to implement. This approach has not delivered the desired outcomes for regional Australia.

5.32Banks enjoy a unique position within the Australian economy, with deposits guaranteed by the taxpayer to protect against potential bank failures. They also enjoy access to capital at a discounted rate compared with other entities and citizens. These benefits engender commensurate responsibilities to the community.

5.33Without regulatory intervention, banks will continue to close branches and communities will pay the price.

A public bank

5.34The committee acknowledges the strong support among submitters for a public bank, or PostBank. There are a number of potential benefits to this option, including increased competition for existing banks, and the potential to set new standards of behaviour.

5.35The committee did hear that a public bank in New Zealand—KiwiBank—has been a success. However, the committee was limited in the evidence it could receive directly from New Zealand so this evidence was mostly second hand.

5.36In addition, the committee is not in a position to conduct a full investigation of the costs and upfront capital required to establish a national bank. No doubt the establishment costs of a national bank would be substantial and, in the committee's view, it would not be appropriate to recommend the establishment of a national bank without the proper investigation of the total costs of such a model.

5.37There are options to reduce such costs, for example, by expanding Australia Post's operations such that in can offer direct financial services to customers, rather than just being an agent for other banks as it is now. This model would leverage the existing branch network of Australia Post although it would still require substantial investments in its operational staff and some upgrades to physical infrastructure at branches.

5.38For these reasons, the committee has concluded that it is not in a position to recommend the immediate establishment of a public bank. However, we do recommend that the government commission a feasibility study of such an option to better understand the costs and benefits of a public bank model. Such an investigation should include the option of expanding Australia Post's operations to include the direct provision of financial services.

5.39The committee recommends that the Australian Government commission an expert panel to investigate the feasibility of establishing a publicly owned bank. In investigating this, the panel should examine options including, but not limited to a stand-alone public bank or one associated with, and using the branch network of Australia Post.

A mandatory code

5.40The existing self-regulatory model of banks monitoring themselves on their adherence to a toothless Banking Code of Conduct is clearly not working. By signing up to the provisions of this code, the banks recognise that they have a broader obligation to consider the impact on small communities before closures occur. However, banks are only paying lip service to these commitments.

5.41The committee supports the development of a mandatory Code of Conduct, which includes provisions outlining the responsibilities of banks to communities where they have branches, and sets out a comprehensive closure process. It has become clear to the committee that the senior leadership within a bank are not presented with clear information about how a bank closure would effect a local town before the decision to close is made.

5.42A bank branch is more than a place to complete transactions. Bank staff are trusted members of the community. They provide advice and assistance, resolve complex issues, support local businesses and community groups to thrive, and help to protect the most vulnerable members of our communities from financial abuse, fraud and loss. Closure of a bank branch deals a significant blow to a community—especially when it is the last bank in town.

5.43Treasury has stated that a mandatory code may be warranted in cases of market failure:

Market failure occurs when there are problems with the operation of a market that prevents it producing optimal outcomes. In these situations resources cannot flow to their best use, to the detriment of industry participants and consumers. … Government intervention will only be considered where there is a demonstrable problem affecting industry participants or consumers which the market cannot or will not overcome, and where such intervention is likely to result in a net public benefit.[22]

5.44The banking industry has been given many opportunities to improve its behaviour and practices, and has failed to do so under industry codes. The current industry Code of Practice and Branch Closure Support Protocol are weak, vague, and offer too many loopholes which absolve banks of their responsibilities to their customers and the community at large.

5.45A mandatory Code of Conduct or Customer Service Code should be developed, taking inspiration from regulation in the United Kingdom, South Africa and other relevant jurisdictions. Before closing a branch, it is reasonable that banks be required to conduct a comprehensive analysis of the community, including demographics, internet access, coverage by other banks and financial services, and likely impacts of the closure. As part of this process, banks should be obligated to consult with local councils, businesses and community groups before making a decision.

5.46Banks must be able to demonstrate arrangements which guarantee secure, accessible, appropriate, and ongoing access for their customers to cash and critical banking services, including identification services, advice, assistance with technology, and help with scams and financial abuse. Rather than leaving communities high and dry, banks must properly fund these arrangements, including transition and ongoing initiatives.

5.47Banks should also be required to assist elderly, Indigenous, and vulnerable customers to switch to another provider if that is what is best for the customer. The committee has heard that there are financial barriers to customers changing banks after a bank has closed a branch. The most common example being the break-fee to migrate a home mortgage to another bank. The committee has a view that where a bank has closed a branch that there has been a material breach in the contract and that banks should waive all break-fees to all customers associated with a closed BSB number. The removal of these types of barriers will allow customers to more easily migrate to banks that are still operating in a town.

5.48It is critical that banks bear the cost of this transition process. Banks would be required to fully fund and coordinate this work and present a comprehensive report to the regulator. The regulator could approve the closure, stipulate enforceable undertakings, and/or ask for more work to be completed if the bank has not demonstrated due diligence.

5.49There is a need for an umpire to enforce a mandatory code. The committee notes that some other countries impose strict requirements on bank closures and in some cases require regulatory approval before closures occur. The committee does not believe that a government agency can properly evaluate all of the merits of a closure proceeding, especially the commercial costs of maintaining a service in the face of declining demand.

5.50Instead, the committee recommends that a regulator be appointed to conduct a process review of any bank's decision to close a branch. The regulator must be satisfied that the bank has complied with its obligations under the updated mandatory code in good faith. The regulator would ensure that the bank has, among other things, properly consulted with the local community before the closure, provided the information collected from this consultation to decision makers within the bank and ensured that appropriate transition arrangements have been put in place for affected parties.

5.51The committee agrees with inquiry participants who questioned the appropriateness of ASIC to provide oversight of a mandatory code and/or branch closure process. In contrast, the Australian Competition and Consumer Commission (ACCC) has expertise in consumer protection, and currently oversees a number of industry codes. As such, the ACCC may be better placed to ensure banks meet their obligations under a mandatory code.

5.52There are a number of options for how a mandatory code could be adopted, including:

amending the Competition and Consumer Act 2010 to include specific banking sector customer service provisions;

developing an industry code to be prescribed as regulations under the Competition and Consumer Act 2010; or

setting up a new scheme and regulator, similar to the Payment Times Reporting Scheme.[23]

5.53The committee is not set on a particular mechanism but would support a model that could be quickly and easily adopted, as time is of the essence; regional Australia is losing banks at an alarming rate and it will soon be too late to act.

5.54The committee recommends that the Australian Government urgently develop a mandatory Banking Code of Conduct or Customer Service Code (Code), incorporating a robust branch closure process, to be administered by a regulator with expertise in consumer protection.

The new Code would require financial institutions to:

undertake meaningful consultation with communities before a branch is closed;

prepare and submit a comprehensive report on the potential impacts of the closure and identify alternative financial services in the event of closure; and

implement and fully fund transition arrangements and ongoing support services which ensure access to cash and essential banking services following a closure.

5.55The committee recommends that the regulator would assess compliance with the Code before any closure is agreed to.

5.56In enforcing the mandatory Banking Code outlined in Recommendation 3, the committee recommends that the regulator be authorised to approve or defer any closure request. In deferring a closure, the regulator would be authorised to direct a bank to take certain reasonable actions, including to order further consultation or provide additional information to the regulator.

5.57The regulator should be provided with a range of penalties should a bank fail to comply with an order to defer closure, or with any other undertaking.

5.58The committee recommends that the Australian Government commission the Australian Competition and Consumer Commission to explore the barriers to customers switching banks, with a view to allowing those that open and/or maintain branches in regional, rural and remote towns to attract more business.

Regional Community Banking Branch Program

5.59Throughout this inquiry, the committee has heard about a number of different approaches to providing in-person banking services to regional, rural and remote communities. The committee recognises that this is not a case of one size fits all. The needs of communities vary and so solutions will need to be tailored for different communities. Earlier in this chapter, the committee laid out its view and recommendations on how banks can play a more hands-on role in working closely with communities to assist them in identifying and establishing some of these solutions prior to a branch closing. This section will focus on the best way forward for those communities who do not have any banking services left.

5.60The committee is supportive of many of the community-led solutions that have been put forward including community hubs and local council banks, mobile banking hubs, and community and customer owned banks. For example, Bendigo Bank operates over 300 'community banks'. These banks are a partnership between a parent bank and a local community. The parent bank provides the corporate know-how, products, back office support and regulatory approvals. The community provides a minimum level of capital to get a community bank started. As Bendigo Bank told the committee at its Ingham hearing:

Mr Rodda: When we first started the model back in 1998, at Rupanyup and Minyip, the capital required from the local capital to be raised was in the order of about $250,000 to $300,000. For business on the books through our lending deposit books, we needed roughly about $20 million to $25 million to make it a sustainable business, to get to profit and to give it time to grow. With the change of banking and the way margins have ever retracted, we're now looking at upwards of $1 million to $1.1 million in local capital, and we're also looking at a business on the books of anywhere between $90 million to $100 million in start-up. That would have to be an equal split of lending and deposits, and that has made it extremely difficult for some communities. We're heavily aware that we don't want to put local capital at risk so we're very vigilant about what we do there because it's local people who would lose their money if it went under.[24]

5.61Given the continuity of so many community bank branches, this model has clearly been successful for many towns. However, given the escalating initial costs of establishing community bank branches. Few have been established in recent times. These higher capital costs appear to be a consequence of the stricter prudential requirements imposed on banks following the Global Financial Crisis. Given that these extra costs were not caused by the activities of those in rural areas, it is not appropriate for them to be penalised due to these changes.

5.62There is a strong case that some public funding be provided to offset these higher costs imposed by prudential standards imposed for the public good. Accordingly, the committee is supportive of the establishment of a dedicated Regional Community Banking Branch Program (RCBBP) that local governments and community groups may apply to and seek funding from, to assist in the establishment of community banking solutions. In applying to the fund, applicants must demonstrate a robust business plan and an equal financial co-‍contribution. In contributing funding to a successful applicant, the Australian Government would take an equity position in the established branch.

5.63The Government could make these contributions from general revenue but given tight budgetary circumstances there is a strong rationale for this funding to be provided by the major banks, especially because it is their disregard for the Banking Code of Conduct that has caused communities to need to resort to solutions like a community bank.

5.64The Government already collects funding from the major banks through the Major Bank Levy. According to the Parliamentary Budget Office just a 10percent increase in this levy would raise $100 million per year. It is likely that less than half of that would be needed to help open multiple new community branches every year.[25]

5.65The committee recommends the Australian Government establish the Regional Community Banking Branch Program (RCBBP). The objective of the RCBBP would be to help underwrite the establishment of ‘community bank' branches providing in-person banking services in regional, rural and remote Australia. Local communities would be required to raise their own capital as well, but the government contributions could help lower the required amounts. Consideration could also be given to using this fund to help enhance financial services available at Australia Post.

5.66To support the RCBBP, the committee recommends that the Australian Government establish a supplement to the Major Banks Levy to be levied on the major banks. Funds raised by the supplement must be hypothecated to provide funding to the RCBBP.

Supporting Bank@Post

5.67Bank@Post provides a critical service all over Australia, including in regional and remote communities. In many towns, the post office is the only place where people can deposit and withdraw cash, and the only service that caters to elderly and vulnerable community members, who need support to access their money.

5.68Providing banking services has been a net benefit for LPOs. Bank@Post can represent as much as 50 per cent of the work done in a post office. Providing these services has helped to keep quieter post offices busy and earning income.

5.69However, as banks have closed more branches, the burden on post offices has increased. More and more, Australia Post is subsidising the banks by paying for cash-in-transit services, security software and infrastructure, and systems upgrades to enable its network to provide these services.

5.70The committee has heard that many licensees are not remunerated adequately to cover the costs of providing these services, and some are making a loss. This is unsustainable.

5.71Savings made by the banks in closing branches must be passed on to Australia Post and its licensees. It should be recognised that banks have shifted a proportion of their costs onto Australia Post, which is a fully publicly owned government business. This means that essentially, tax payers are subsidising bank profits. This cannot be allowed to continue.

5.72The Australian Government should support Australia Post to negotiate a better deal with the banks. Revised contracts should include provisions for cash‑in‑transit services, remuneration for balance inquiries and other customer service interactions undertaken by post office staff on behalf of the banks, and greater support for post offices in towns where there is no longer a bank.

5.73Major banks need to expand the range of services that can be conducted through Bank@Post, including by allowing post offices to increase cash limits on deposits, provide identity verification services, change PIN numbers and lodge paperwork. Post Offices are well‑equipped to do this work, and banks have a responsibility to reduce these barriers—particularly where the nearest bank branch is a long way away.

5.74Contracts should be standardised across banks, with deposit and withdrawal amounts and rules and requirements made consistent to reduce the burden on post offices of providing disparate services. There is also a need to ensure that all major banks provide banking services through Australia Post.

5.75If commercial negotiations fail to deliver adequate outcomes for rural and regional consumers, the Australian Government should consider increasing the Major Bank Levy to help expand financial services offered through Australia Post and in rural areas.

5.76In relation to fees, the ACCC could investigate fees charged by banks for using Bank@Post. Customers should not pay more to use Bank@Post, especially when their bank has closed its branch and left customers with no other alternative.

5.77The committee recommends that the Australian Government works closely with the banks and Australia Post, to require all major banks to have agreements with Bank@Post and to harmonise the terms of Bank@Post agreements to improve fairness and sustainability. Specifically, agreements should include increased deposit limits to support small businesses, provisions to facilitate identification verification, and to handle issues around temporary account closures or multiple signatory requirements.

5.78Major banks that do not put in place agreements with Bank@Post to deliver financial services should pay an increased supplementary levy as described in Recommendation 6.

Coordination to ensure ongoing access

5.79The committee is pleased that Armaguard, regulators, banks and other organisations dependent on the cash-in-transit (CIT) sector are working closely together to identify a solution to the profitability of the largest and most important CIT service provider. It is essential that an equitable and sustainable solution is found to guarantee the future provision of CIT to regional, rural and remote towns. The Reserve Bank of Australia (RBA) and the ACCC recognise the urgency and importance of this task. The committee will continue to monitor this evolving situation.

5.80The committee notes that one of the strategies employed by the ACCC to resolve the CIT issue has been to allow limited collusion between the banks so that they can work together. The committee recognises that steps to suspend anti‑competitive requirements between large companies are unusual and should not become a routine occurrence. Notwithstanding this, the committee also recognises that in cases where there is a breakdown in a market such as CIT or banking services in regional locations, these suspensions can potentially offer more benefits than costs.

5.81The committee believes that there is a good argument for the removal of regulatory barriers in limited circumstances. If this is done in a carefully calibrated way, it can affect positive outcomes for regional banking. For example, one of the suggestions that has been put to this inquiry is the co‑location of bank branches or a coordinated closure of branches with a view to leaving at least one bank branch presence in a town. This would require banks working closely together to agree where branches might be left open and to share commercial information in order to come to these types of arrangements.

5.82The committee's view is that a town with a co-located or a single permanent branch is better than one with no bank at all. The committee would welcome the ACCC examining how the limited suspension of anti-competitive requirements under the regulator's close supervision might result in better banking services outcomes for remote communities.

5.83The committee recommends that the Australian Competition and Consumer Commission consider measures to protect access to personal and business banking services in regional, rural and remote locations. This may include, but not be limited to, proposing an authorisation to circumvent anti‑competitive laws such that banks can cooperate for the purposes of reducing the impacts of bank branch closures on regional communities.

Senator the Hon Matthew Canavan

Chair

Footnotes

[1]Australian Prudential Regulation Authority (APRA), opening statement for Canberra public hearing, 1December 2023, p. 2.

[2]Dale Webster, Submission 196.5, p. 1.

[3]Dale Webster, Submission 196.5, p. 1.

[4]Dr Andy Schmulow, Submission 581, p. 11; Dr Klaus Serr, Submission 584, pp. 6–7. Note: DrSchmulow is also referred to as Associate Professor Schmulow.

[5]Australian Lottery and Newsagents Association (ALNA), Submission 599, p. 2.

[6]See for example: Per Capita, Submission 357, pp. 4–5; Combined Pensioners & Superannuants Association, Submission 400, p. 2; Financial Counselling Australia, Submission 589, p. 3; Adrian Giacobetti, Submission 572, p. 1; AgForce Queensland Farmers Limited (AgForce QLD), Submission 396, [p. 2]; Monic Mesch, Submission 139, [p. 2]; Australian Citizens Party (ACP), Submission 539, p.4; Dr Serr, Submission 584, pp. 6–7.

[7]Per Capita, Submission 357, pp. 4–5.

[8]AgForce QLD, Submission 396, [p. 4].

[9]Dale Webster, Submission 196.1, pp. 4–5 and 7.

[10]ACP, Submission 539, p. 3.

[11]See Chapter 2 of this report.

[12]See for example: Dr Serr, Submission 584, p. 10; Hon. Bruce Billson, Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Committee Hansard, 1 December 2023, p. 69.

[13]Dr Schmulow, Submission 581, p. 1; Per Capita, Submission 357, p. 12; ALNA, Submission 599, p. 2.

[14]Isaac Regional Council, Submission 287, p. 10.

[15]Bank Reform Now, Submission 551, p. 2.

[16]Western Queensland Alliance of Councils (WQAC), Submission 535, p. 5.

[17]ACP, Submission 539, pp. 10–11.

[18]Dr Schmulow, Submission 581, p. 1.

[19]Dr Schmulow, Submission 581, p. 11. Original emphasis.

[20]Mr Alan Kirkland, Commissioner, Australian Securities and Investments Commission (ASIC), Committee Hansard, 1December 2023, p. 30.

[21]AgForce QLD, Submission 396, [pp. 3–5].

[22]Department of the Treasury, Industry Codes of Conduct: Policy Framework, November 2017, p. 8.

[23]The Department of the Treasury, Payment Times Reporting Scheme(accessed April 2024).

[24]Mr Tim Rodda, Head, Local Banking Operations, Bendigo and Adelaide Bank Group, Committee Hansard, 18 May 2023, p.28.

[25]At the request of Senator the Hon Matt Canavan, the Parliamentary Budget Office costed a proposal to increase the rate of the Major Bank Levy by 10 per cent (that is, from 0.06 per cent to 0.066 percent per annum). The levy is imposed on certain liabilities of the Commonwealth Bank, Westpac, ANZ, NAB, and Macquarie Bank The costing can be found here.