‘Essential’ need for regional SMEs to access banks: ASBFEO

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Bruce Billson, has responded to the Regional Banking Taskforce’s consultation on the impacts of regional bank branch closures warning of the wide-reaching impacts of branch closures on local communities and economies.

Noting that there has been a 24 per cent fall in regional bank branches over the last four years, Mr Billson said that banking services are “essential” to small and family-run businesses in rural and regional areas and can have a ripple effect on the wider community.

The ASBFEO said: “Small businesses rely on banking services to operate in the modern economy and it is essential those in rural and regional areas have access to the full range of banking facilities.

“Branch closures increase small business administrative costs, the level of risk for business owners, and have a community wide economic impact caused by business patronage moving away, along with reduced community amenity, particularly if it is the last remaining bank in town.”

One of the perils of closing off access to banking services, Mr Billson proffered, was that SMEs also run the risk of unknowingly turning to unlicensed financial services/credit providers that may not be members of relevant complaints/ombudsman services or provide pathways to recourse.

“That is a bad outcome and there is more that can be done to support small businesses when a bank branch closes,” he said.

However, he suggested that more should be done to support those impacted by branch closures, such as being able to move to another bank that does have a local presence without being charged penalties/fees and expand the rollout of NBN connectivity and support services to ensure they can access banking/finance services digitally.

“My office would welcome the opportunity to work with the Australian Banking Association (ABA) to amend the code of practice to ensure customers affected by a branch closure can move to any other bank with no cost penalties,” Mr Billson said.

“We have also asked the taskforce to consider expanding programs such as the Regional Tech Hub to help rural and regional small businesses to secure safe banking services. Particularly in areas where there is no local bank branch, NBN connectivity is critical.

“My office has long argued that access to banking and vital communications services are essential and a greater focus is needed to set and adhere to deliverable service standards. Where these standards are not met, impacting a small or family business, some consequences and remediation steps should apply.”

The ASBFEO concluded: “Australian small and family businesses have faced many difficult challenges over the past two years – the pandemic has exacerbated the impact of bushfires, floods and drought. These businesses need support as they work to get back on their feet, including access to essential banking services.” 

The consultation for the taskforce has now closed and the taskforce will continue exploring potential solutions for maintaining and improving banking services and accessibility with more meetings scheduled for January 2022. It had held its initial meetings in November and December.

The Regional Banking Taskforce includes members from government and from the banks to evaluate how branch closures have impacted local businesses, industries and communities. It is co-chaired by Assistant Treasurer and Minister for Housing Michael Sukkar and NSW senator Perin Davey, who will report findings and potential solutions to Treasurer Josh Frydenberg and Minister for Regionalisation Bridget McKenzie.