The has accelerated since the COVID-19 pandemic,sparking a backlash from regional communities,and political scrutiny through a long-running Senate inquiry.
Nationals Senator Matt Canavan:“There now needs to be a stricter and more proactive approach to rebuild financial services in the bush.”Rhett Wyman
On Friday,the inquiry – chaired by Queensland Nationals Senator Matt Canavan – delivered its final report,making recommendations that Canavan acknowledged went further than previous investigations into the always-sensitive.
Labor senators on the committee expressed concerns about the suggested crackdown on branch closures,saying it could have “unintended consequences”.
The report said more than 2100 branches had closed between 2017 and 2023,citing Australian Prudential and Regulation Authority data – a trend banks blame on the shift to digital banking.
However,the report alleged banks had failed to genuinely consult local communities when deciding to shut branches,and it argued strict regulation was needed.
“Given the past catastrophic failures of state-owned banks in this country,Australians should be wary of suggestions of a new taxpayer-funded government-owned bank.”
Anna Bligh,Australian Banking Association chief executive
It proposed changes including:a mandatory code that would require banks to seek regulator approval before shutting branches;an increase in the major bank levy to help fund the establishment of “community bank” branches in regional and remote areas;and that the government investigate the formation of a new publicly owned bank,which could possibly use the network of Australia Post.
It pointed to the taxpayer-owned KiwiBank in New Zealand,and suggested a public bank could increase competition for existing players.
Senator Canavan said:“Our committee’s recommendations go further than many previous reports on banking closures but there is clearly a need for a different approach.
“The major banks have not acted in good faith on the closure of branches in regional towns. There now needs to be a stricter and more proactive approach to rebuild financial services in the bush.”
As the last bank branch in a NSW regional town closes,a senate inquiry has been announced to investigate branches shutting up shop across the state.
Labor senators on the committee expressed concerns that some of its recommendations “could have unintended consequences on existing service provision in the regions”. “There may be unintended impacts on prudential supervision of banks,as well as competition and insolvency laws,” they said.
Australian Banking Association chief executive Anna Bligh sought to highlight the shift to digital banking,while also warning that establishing a new government-owned bank could threaten smaller banks that serve customers in regional areas.
“Given the past catastrophic failures of state-owned banks in this country,Australians should be wary of suggestions of a new taxpayer-funded government-owned bank,” she said.
The Customer Owned Banking Association,whose members have a significant presence in regional areas,said increasing regulation on smaller banks with regional branches would be counter-productive.
“A government-owned competitor would be an unwelcome market intervention that could have significant unintended consequences. A better option is to support the many banks which have been providing regional banking services for almost 180 years,” Customer Owned Banking Association chief operating officer Stephanie Elliott said.
The report also said the government should declare access to financial services an “essential service” and guarantee the population have reasonable access to cash and financial services.
The Finance Sector Union backed key recommendations of the inquiry,including the committee’s call for a mandatory code on branch closures and the proposed investigation into a new taxpayer-owned bank.
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