A recent inquiry has revealed that a banking regulator should have the authority to veto branch closures to prevent country communities from losing essential services. The Senate inquiry into branch closures across rural Australia released its final report on May 24, making eight recommendations to safeguard regional banking.
During the year-long investigation, the committee traveled extensively across rural Australia to understand the impact of country bank closures on daily life and businesses. Testimonies from remote business owners highlighted the challenges of transporting large sums of cash to city branches or traveling long distances for banking services.
Farmers lamented the loss of local bank managers with specialized knowledge in agribusiness, while elderly individuals expressed difficulties accessing cash and concerns about potential scams.
Community groups also raised issues with obtaining cash floats for events like fairs, sporting games, and fundraisers, which play a vital role in the social fabric of rural life.
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One notable case cited in the report was the closure of a Westpac branch in Tennant Creek, where residents, including many Indigenous elders, were left without access to cash and forced to adopt digital services suddenly.
The inquiry’s report emphasized the widespread community distress, disappointment, and anger in regional Australia, with people feeling abandoned and disrespected by banks.
Key recommendations from the report included the urgent development of a mandatory code of conduct requiring banks to engage in meaningful community consultation. It also proposed granting a regulator the authority to approve or delay branch closures and penalize non-compliant banks.
Witnesses expressed support for the concept of a public bank, potentially utilizing the Australia Post network. The committee suggested the government establish an expert panel to explore the feasibility of this idea.
Additionally, the report recommended the creation of a program to support community banks established through local investment, potentially funded by a levy imposed on banks.
The report criticized the current self-regulation model of the banking industry, noting that regional Australia had lost 798 branches in the five years leading up to June 2023, with a surge in closures during the COVID-19 pandemic.
While banks attribute branch closures to the increasing popularity of digital services and declining face-to-face transactions, they opposed obligations to maintain a minimum number of regional branches.
During a hearing in 2023, NAB’s then CEO, Ross McEwan, cautioned against enshrining a static banking environment, highlighting the industry’s rapid evolution.
