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Writer's pictureDale Webster

Banks blow their chance to self-regulate by betraying trust

Updated: Jun 14

ABOVE: The ANZ Bank in Tallangatta was one of the first to be closed after the banks were trusted by the government to continue to self-regulate community service obligations.

IT may have taken 20 years but a Federal Government inquiry has finally made good on a warning that if the 'big four' banks did not improve their treatment of regional Australian customers, they would be stripped of the privilege to self-regulate.  


Many thought this day would never come but the most surprised must be the banks or they would have never behaved in the ways outlined in detail during a senate committee’s 15-month deep dive into the welfare and economic impacts of regional bank closures.


Over the 13 hearings held across Australia and in more than 600 written submissions the only defence of the banks’ actions came from the banks themselves, but when their executives appeared to give evidence, all they managed to do was convince the senators of just how out of touch they were with their customer heartland.


This arrogance was perfectly summed up by expert witness Andy Schmulow, Associate Professor of Law from the University of Wollongong.


“When it comes to closing branches, Australia is a free for all in which banks are entirely unconstrained: there is no degree to which they are held to account in discharging their obligations to communities which have supported them for generations. This, it is respectfully submitted, is disgraceful and indefensible,” Dr Schmulow said.


The senators agreed.


On Friday they handed down an historic report with eight bold recommendations.  


Among them:


Recommendation 1: The committee recommends that the Australian Government adopt a policy recognising access to financial services as an essential service. To this end, it should commit to guaranteeing reasonable access to cash and financial services for all Australians.


Recommendation 2: The 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.


Recommendation 3: The 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.


In short, this means access to bank services and cash will be recognised as a fundamental right to be taken into account when the government is making decisions.


It means a new public bank – think the old Commonwealth Bank before it was privatised – has been put firmly on the table for consideration.


It means the end of banks being accountable to no one but themselves and that they will have to ensure their customers still have access to cash and essential banking services before leaving a community. If not, the regulator would even have the power to stop the closure.


These are big moves by the senators, but they needed to be.


For these senators to have turned their backs after listening repeatedly to testimonies outlining the same atrocious behaviour by the banks and the same welfare and economic problems being left behind would have been unconscionable.


Serious solutions were necessary and that is what they delivered.


If the same thing had been done in 2004 when the senate last looked at this issue 1000 regional banks might have been saved.


The Chapman inquiry – Money Matters in the Bush – was presented with the same quality of evidence and the issues were thoroughly examined in a document twice the size of the one delivered last week, but when it came to delivering recommendations, the banks were trusted to continue to self-regulate.


It was Penny Wong and the Labor senators on the committee who had the final word saying the ALP was prepared to re-regulate the banks if they didn’t agree to meet voluntary community service obligations.


No one could argue (except the banks again) that reducing regional Australia’s bank network to less than a third of what it was at its peak and leaving another 150 towns with no banking services at all is good community service.


ANZ, the Commonwealth, NAB and Westpac have blown their chance.


It’s time for the Albanese Government to honor Labor’s word by supporting the recommendations of this inquiry in full.



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