Town takes fight to Parliament to save last bank

Opposition to the closure of a small town's last bank has prompted an open letter from Junee Shire Council calling for a parliamentary inquiry into bank service levels in rural, regional and remote Australia.

DEAR SENATOR,

Junee Shire Council is calling for the consideration of a parliamentary inquiry into bank service levels in rural, regional and remote Australia at the February parliamentary sitting, together with the immediate suspension of all listed bank branch closures.

Background

The Commonwealth Bank is closing its branch in Junee on 3 March 2023.

Junee Shire Council lodged a complaint with the Australian Financial Complaints Authority (AFCA) on 16 November 2022 objecting to the closure of the Commonwealth Bank Branch in Junee. The council does not accept that Commonwealth Bank has complied with the Australian Banking Association (ABA) Code of Practice or Branch Closure Protocol and may be in breach of its own contractual agreements between the bank and its customers.

Despite our repeated requests for an AFCA case worker to be assigned to our complaint and the scheduling of a hearing date for the council's complaints to be heard, there has been no real progress by the AFCA.

Given that the AFCA is a government authority, we are disappointed with its sluggish response time, which has effectively suppressed the opportunity to overturn the Commonwealth Bank’s decision.

Being the only real mechanism for addressing complaints on financial matters, this highlights the imbalance between a powerful self-regulated banking sector and the absence of meaningful government scrutiny.

Impact on regional communities

As you would be aware, bank branch closures are having a disproportional impact on regional Australia over our city and metropolitan counterparts. The Big Four banks are meddling in a form of social engineering by forcing their loyal customers into banking practices they do not want or may not be able to access.

With one-third of Australia’s population residing in regional Australia, the commercial decisions of the Big Four banks in removing bank branches are impacting social and economic outcomes in rural communities and of individual citizens.

The reality is there are vulnerable and marginalised people in communities who aren’t able to use or will never own a smartphone or connect to the internet. Elderly members within our community are fearful of scammers and fraudulent activity if they use over-the-phone or internet services for banking purposes.

The alternative, Bank@post service, does not meet the average person's or business' banking requirements. Driving to another location in rural or remote Australia for face-to-face banking services will further marginalise the most vulnerable in society.

It is with some irony that even the Big Four bank’s customer surveys typically acknowledge that somewhere between ten and 20 per cent of their customers prefer branch face-to-face services.

Coober Pedy lost its only bank last week. The nature of its local economy relies heavily on cash transactions — now the nearest bank branch is 500 kilometres away. With the importance of the opal trade to Coober Pedy and the fact that visiting "grey nomads" generally prefer cash over card transactions, this pattern is symptomatic of the broader economic issues facing other rural and regional towns.

Media interest

There has been consistent media interest in the Big Four banks regarding social and economic impacts on people’s lives and livelihoods, particularly the most vulnerable and marginalised within society. Junee Shire Council has been requested to participate in numerous media interviews since December including the 7.30 Report, national newspapers and recently, Karl Stefanovic from the 'Today' show crossed lived to Junee for a local interview.

Mayoral forum

Mayor of Junee Shire Council Neil Smith also held a crisis mayoral forum last week inviting councils impacted by branch closures from across the country. Councillor Smith was praised by those attending for elevating this matter. The mayors present agreed that there is an urgent need to work collectively to advocate for change on this issue.

Banking self-regulation

Successive governments have preferred an arm’s length approach preferring banking self-regulation over government regulation. Previous banking inquiries have led to the creation of a weak self-regulated Banking Code of Practice and branch closure protocol.

This approach is not working.

Relying on a Bank@post service will not take up the slack from departing banks abandoning rural communities. Limited daily deposits and withdrawals stop well short of the community and business needs of rural Australians.

The decision by the Big Four banks as to which bank branches will close isn’t transparent and we would argue the template for closures is selective and limited to avoid an adverse public reaction of sufficient scale to warrant government intervention.

'Piggy' banks rack up rural closures

The "big four" banks started pulling out of regional Australia more than 30 years ago, but lack of transparency has made confirming the scale of closures difficult.

Regional Banking Taskforce report 2022

The Regional Banking Taskforce report and recommendations have failed communities miserably. With little in the way of improvements to system oversight, accountability or enforcement, the Bank Four banks’ past practices were soon reinstated with 72 more branches listed to close.

The report certainly did not provide enough support, comfort, or recognition to those many people and industries who made submissions to the Taskforce. It appears to this council that the balance of membership appointments to the Taskforce was so weighted with banking sector officials that the eventual outcomes represented the dominance of membership.

This council, having read the bulk of the Taskforce submissions, cannot understand why such important issues raised by credible sources were not sufficiently addressed in the recommendations in the final report. Council notes submissions from the following organisations highlighted critical social, economic and access issues impacting regional Australia, in particular:

Australia Retailers Association;
the Banking Code Compliance Association;
Berrigan Shire Council;
the Law Society of NSW;
Choice; and
the Combined Pensioner and Superannuation Association of NSW.

Taskforce recommendations to be implemented by 30 June 2023

Key recommendations from the Taskforce report include:

The ABA should review and strengthen its branch closure protocol and introduce an ABA Customer Care Standard by mid-2023 to improve communication and support when regional branches close or their hours are being permanently and materially reduced.
Banks should establish a process for conducting and publishing regional branch closure impact statements by mid-2023.

Due to the mid-2023 completion date for these recommendations, those communities that currently have a branch listed for closure since the completion of the Taskforce are subjected to further disadvantage.

Conclusion

Should the branch at Junee close on 3 March 2023, it will amount to about 700 branch closures across Australia in the past three years. At this rate there is unlikely to be a bank branch left in regional Australia in three to four years' time. This council does not believe such an outcome would be acceptable to Parliament.

The Big Four bank’s community and social promises are not passing the pub test. Particularly when the banking sector has profited from the Reserve Bank’s $188 billion Term Funding Facility by $100s of millions in interest. Where government is prepared to intervene positively in commercial markets involving financial services like the Term Funding Facility, then it shouldn’t argue it cannot intervene in commercial banking services when there is a clear public interest in doing so.

Junee Shire Council respectively requests that Parliament move for a parliamentary inquiry on bank service levels in rural, regional and remote Australia together with an immediate suspension on all listed bank branch closures at the parliamentary sitting this February, addressing:

Access to banking services

The fundamental issue is about the discriminatory restriction of access to financial services and an individual's or organisation's/business’ own money.

Welfare and human rights abuses

Branch closures and attempts by banks to force all customers onto digital and phone banking are creating welfare issues of substantial proportions.

Ethics

The banks are surrounded by a framework of ethical boundaries. In practice this framework is self-regulated and unenforceable. Banks are making a charade of being accountable to customers and rural communities.

Legal

Separate from self-regulated codes, banks are getting away with breaking the directions and intentions laid out in previous banking inquiries due to a lack of government scrutiny.

Yours faithfully,

James Davis
General Manager

cc: Member for Riverina, Michael McCormack