Senate passes down regional banking inquiry recommendations

The Senate committee on rural and regional affairs and transport has released its list of recommendations that aim to address the impacts of bank branch closures on regional and remote communities.

Those recommendations included:

• Bank branch alternatives, such as better remote service options, co-location of banks, community hubs, local council banks, mobile banking, and more community and customer-owned banks.
• Increasing the role of Bank@Post.
• A national public bank.
• Regulatory reform options such as imposing a universal service obligation on banks, increasing regulation, and oversight in relation to bank closures.
• Options to address the ‘stickiness’ of bank customers.
  
  

According to the inquiry, banks have claimed to have introduced measures to assist remote communities in maintaining access to banking services.

Westpac’s chief customer engagement officer Ross Miller told the committee that the major bank “can do many things currently that previously would have been done physically or face to face” through the ability to have remote conversations.

The committee noted Miller’s claim that Westpac had experienced “a huge uptake in [its] virtual bank offerings”, while NAB explained that 40 per cent of its home lending appointments are now conducted through videoconferences.

Furthermore, the committee recommended that the Australian government “urgently develop” a mandatory Banking Code of Conduct or Customer Service Code, which would incorporate a robust bank closure process to be administered by a regulator “with expertise in consumer protection”.

Thus, this 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.
• Implement and fully fund transition agreements and ongoing support services that ensure access to cash and essential banking services following a closure.

Additionally, the committee recommended that the regulator be authorised to approve or defer any closure request in enforcing the above recommendation.

“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,” the committee said.

“The 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.”

In October 2023, the Australian Prudential and Regulation Authority (APRA) highlighted that there was a continued decline in bank branches up to 30 June 2023.

APRA revealed a reduction of 424 branches across Australia in the financial year 2023 (down 11 per cent), including 122 branches (7 per cent) in regional and remote areas.

[RELATED: APRA confirms bank branch closure trend]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.