The federal government has set out its plan for regional banking access, yet declined some of the inquiry’s boldest proposals.
The federal government has delivered its long‑awaited response to the Senate rural and regional affairs and transport committee’s report on bank closures in regional Australia, backing moratoriums and Bank@Post reforms while rejecting a proposed publicly owned bank.
The Senate committee’s first recommendation urged the government to adopt a formal policy recognising access to financial services as an essential service.
The government noted the recommendation, acknowledging its importance, yet stopping short of codifying banking as an essential service in law.
To explain its position, the government said that regional communities must not be left behind as banking shifts online.
“The Government recognises that access to cash and bank banking services are critical to regional Australia. As more Australians move to online banking, the Government is taking action to make sure regional communities are not left behind,” it said.
To reiterate that action, the government pointed to commitments Treasurer Jim Chalmers had secured from the major banks, including a moratorium on regional branch closures until July 2027 and new or updated Bank@Post agreements with Australia Post.
Public bank proposal ruled out
The strongest rejection in the response came on recommendation 2, which called for an expert panel to investigate the feasibility of establishing a publicly owned bank.
In rejecting the recommendation, the government said that competition and regulation, not public ownership, should underpin the system.
“The government believes a well‑regulated and competitive market for banking services is the best way to achieve the goal of promoting access to value‑for‑money financial services that meet the needs of businesses and consumers,” it said.
It further said that “the establishment of a publicly owned bank would carry significant costs and risks for government and, ultimately, taxpayers”.
Mandatory closure code left on the table
Recommendations 3 and 4 proposed a mandatory Banking Code of Conduct or Customer Service Code, overseen by a consumer‑protection regulator and built around a robust branch‑closure process.
The code would require banks to undertake consultation with communities before closing a branch, prepare a comprehensive report on the likely impacts, identify alternative financial services, and “implement and fully fund transition arrangements and ongoing support services which ensure access to cash and essential banking services following a closure”.
The follow‑up recommendation suggested giving the regulator powers to approve or defer closure requests.
The government noted both recommendations.
ACCC and switching barriers
Recommendation 5 pushed the government to commission the ACCC to explore barriers to customers switching banks, with the aim of allowing lenders that maintain branches in regional communities to attract more business.
The government agreed in principle and pointed to prior ACCC inquiries into home‑loan pricing and retail deposit markets in 2020 and 2023, respectively, which highlighted issues around friction in discharge processes.
The government said that its June 2024 package announced by Treasurer Chalmers following those inquiries included standardised mortgage exit forms, a 10‑business‑day limit for processing discharge requests, behavioural‑economics work on customer prompts, and a review into mid‑tier and small banks.
However, the government did not release a formal, stand-alone written response paper to either of the inquiries – a move that was criticised at the time due to numerous recommendations from both inquiries being left unanswered.
Community banking, Bank@Post agreements, and competition
On recommendation 6, which proposed a Regional Community Banking Branch Program (RCBBP) underwritten by a supplement to the Major Bank Levy, the government again opted to note rather than endorse.
The committee envisioned the RCBBP helping fund “community bank” branches delivering in‑person services in regional, rural, and remote Australia, with all levy proceeds injected into the program.
Yet the government agreed in principle with recommendation 7, this being for all major banks to have Bank@Post agreements and to streamline those agreements to improve sustainability.
The recommendation spelt out several features that should be included, such as increased deposit limits, provisions to facilitate identification verification, and arrangements to manage temporary account closures or multiple signatory requirements.
Recommendation 8 encouraged the ACCC to consider measures to protect access to personal and business banking services in regional, rural, and remote locations, including the possibility of authorising co-operation between banks that would otherwise be restricted by competition law.
The government again noted the recommendation, suggesting an openness to targeted ACCC authorisations where they improved regional service continuity.
[Related: Negative gearing, CGT reforms pass Parliament]
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