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Additional comments by Labor Members
MONEY MATTERS IN THE BUSH
1.1
Labor members welcome the Committee’s report into banking services in
regional, rural and remote Australia and generally support its recommendations.
However, there are a number of matters which we consider require additional
comment.
1.2
One of the main principles expressed in the report is that:
Access to a basic banking service is an essential service—and
that all Australians should have affordable and ready access to a deposit
account which receives funds and can be used to make payments.[1]
Labor members agree with this and have always advocated that
banking is an essential service.
1.3
The level of monitoring of access to banking services and the cost of
those services is an issue of concern to the Labor members. More needs to be
done to ensure that the monitoring of such services is independent, rigorous
and has appropriate stakeholder input.
1.4
While noting that services such as phone banking, EFTPOS, ATMs and
giroPost are filling some of the gaps left in communities when banks have
removed their branches—these alternatives are not always sufficient in some
communities and the higher costs associated with consumers using some of these
services is of real concern.
1.5
Labor members note that there is some inconsistency between the
conclusions reached in this report and the report on the inquiry into foreign
ATM fees and charges in respect to the potential for differential fees for
rural or remote areas. In particular, the Committee report states that the obligations
of the banking industry include:
...ensuring that bank practices such as charges and fees and
interest rates on home loans do not discriminate against people in regional,
rural and remote Australia.[2]
1.6
Labor members believe that this is at odds with Recommendation 1 of the
Foreign ATMs Fees and Charges report that recommends the following:
safeguards that would ensure that people living in country towns
and remote communities do not incur significantly higher fees or charges for
using a foreign ATM and that an unreasonable or unwarranted differential in
fees and charges between those in rural and remote areas and those in
metropolitan areas does not develop.[3]
1.7
Labor members believe that this recommendation does not go far enough
and does not ensure that the fundamental flaws in the ATM Industry Steering
Group (AISG) model are appropriately dealt with. In Labor’s view no
differential in foreign ATM fees between different locations is reasonable or
warranted. This qualification gives the ATM industry too much discretion to
ramp up fees in rural regional areas.
1.8
Further comments on this issue are contained in the Labor members’
separate report on Foreign ATMs Fees and Charges.
Comments on specific recommendations
Recommendation 3
1.9
In respect to closure of rural or remote branches, Labor members support
the Committee’s recommendation for improved consultation and a notice period of
six months to be provided if a branch, which is the only branch in a town, is
to close.
1.10
Labor believes the six-month notice period should cover all branch
closures, not just those in regional and rural areas.
1.11
While recognising the value of the proposed community interest impact
statement that would be completed by a bank where a branch is to be closed,
Labor members believe that the guidelines of any such impact statement need to
be agreed with by appropriate government, industry, community and consumer
groups. Without appropriate guidelines and some form of quality control of
these impact statements their value may end up being quite limited. As a
minimum the following stakeholder groups should be included in the process to
develop guidelines and quality control measures for the community interest
impact statement:
- Australian Local Government Association (ALGA)
- ASIC
- small business representative
- state governments
- consumer groups
Recommendation 4
1.12
Labor members welcome the recognition by the Committee that the current
system for the ‘points of presence’ database is not adequate. However there
needs to be broader consultation with regional communities to ensure that
reforms to the points of presence database are both adequate and encapsulate
the needs of industry, government and the community.
1.13
Labor members share the Committee’s concern that there does need to be
improved analysis and commentary on the information provided through the points
of presence database. While the Committee has requested that another
government agency, not APRA, be requested to do this, Labor members believe
that APRA should have a role in analysing and commenting on the data but this
should be done in conjunction with the ACCC. Given the ACCC’s role in
assessing levels of competition in the banking services industry they would
bring a good deal of expertise to any assessment of access to banking services.
Recommendation 12
1.14
Labor members support the priority placed on introducing industry
standards that support older Australians and those with a disability to achieve
full and equal access to services such as ATMs and EFTPOS.
1.15
However in respect to the monitoring of the implementation of these
standards Labor members believe that any such monitoring should not be left
solely in the hands of the ABA. To ensure adequate stakeholder input
appropriate disability and older Australians advocacy groups should be both
consulted on the process for monitoring the introduction of these standards and
these groups should also be involved in the monitoring and reporting processes.
Recommendation 22
1.16
Labor members support the expansion of EFTPOS facilities to allow for
access to account balances. However, there should not be an additional fee for
this service and the balance information request should not be considered as a
transaction where consumers can only access a limited number of free
transactions.
1.17
This approach to EFTPOS balance enquiries is consistent with Labor’s
call for the banks to introduce real time disclosure for ATMs and provide
account balance information at no cost to the consumer.
Banking and remote Indigenous Communities
1.18
Much evidence was taken by the Committee on the difficulties confronting
indigenous Australians regarding access to banking services and financial
literacy generally. It is apparent that many remote and regional indigenous
communities lack sufficient basic banking services. In some cases, it is not a
case of services previously being enjoyed being withdrawn, but services not
ever having been provided at all. As importantly, the lack of such services is
compounded by factors such as remoteness, socio-economic disadvantage (in some
instances extreme), poor levels of numeracy and literacy (and accordingly low
levels of financial literacy), cultural difference, and language barriers.
1.19
Labor members consider that access to basic banking services and
minimum levels of financial literacy are preconditions to redressing the
disadvantage experienced by many indigenous communities in remote and regional Australia.
There is little point in governments encouraging indigenous Australia to
achieve greater economic independence if the basic building blocks of economic
development are not in place.
1.20
Accordingly, whilst Labor members are generally supportive of the Committee’s
recommendations in relation to indigenous Australians, we make the following
additional points.
1.21
In relation to Recommendations 24 and 26, Labor members see a need for a
multi-faceted strategy to improve the financial literacy of indigenous
Australians, co-ordinated by the Government, and involving indigenous
organisations, state and territory governments, and financial institutions.
Whilst we support Recommendation 24, which calls for financial literacy to be
included in core school curricula, we consider this to be only one of a number
of strategies that are required. We also believe that the involvement of
indigenous organisations, particularly those with demonstrated success in the
area of financial literacy education, to be critical.
1.22
Further, we consider that Recommendation 26 fails to go far enough. It
is insufficient to call on the ABA to simply ‘examine’ the successful practices
utilised in Canada in relation to indigenous financial literacy. In our view
the ABA should develop, in partnership with relevant indigenous organisations,
a comprehensive strategy for improving the financial literacy of indigenous
users of banking services, drawing on the Canadian experience. Labor members
are encouraged by some of the initiatives taken by some banks, and also by the ABA’s
indicated willingness to work with Reconciliation Australia on this issue.
However, it is our view that in the event these voluntary initiatives prove to
be insufficient, these issues would properly be considered in the context of
compulsory community service obligations.
Recommendation 25
1.23
Labor members support the Committee’s call for government assistance in
the form of an employment and professional development scheme to encourage
employment of indigenous people in financial services. However, we consider
that more specific government or non-government support for organisations which
(successfully) provide financial services to remote and regional indigenous
communities ought be considered. Organisations such as the Traditional Credit
Union provide much needed, culturally sensitive services, often under
significant cost pressures resulting from the nature of the services provided
and the make-up and geographic location of their customer base. We consider
that the Government should investigate means of providing support to such
organisations. In addition, we would encourage the ABA to consider methods of
providing financial or in-kind assistance to such organisations.
Recommendation 29
1.24
Labor members support extending the jurisdiction of the Banking and
Financial Services Ombudsman (BFSO) to be able to consider and advise on
complaints regarding consumer difficulties in accessing banking services.
Labor members believe that the jurisdiction of the BFSO should be widened
further to encompass consumer complaints about the cost of banking services.
Recommendation 30
1.25
Labor supports the introduction of Community Service Obligations on ADIs
– the ALP has signalled its preparedness to re-regulate the banks if they do
not agree to meet appropriate voluntary community service obligations.
SENATOR PENNY WONG
DEPUTY CHAIR
MR ANTHONY BYRNE MP
SENATOR STEPHEN CONROY
MR ALAN GRIFFIN MP
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