Banks would have to meet a minimum level of service in regional areas or contribute funding to bolster the number of branches and ATMs offered by other institutions, in a proposal put forward by Treasury, The Guardian reports.
According to a confidential report sent to bankers this week, seen by Guardian Australia, Treasury has outlined two proposals to better support the presence of in-person branches and ATMs.
One was a community service obligation, with a “baseline” of minimum services and expenditure for banks according to their service level and market size. If this cannot be met, banks could offset their “deficit” by funding services for other institutions.
“Alternatively, banks that have not met the floor or baseline of obligations could purchase credits that other banks have earned through providing above the required level of services,” the report said.
Preliminary analysis included with the report showed that the major banks – oddly, excluding NAB – and digital banks would not meet the baseline and would need to provide funding under the redistribution model.
The second option was a mandatory bank branch closure code – informed by a UK model, which builds on banks’ obligations to ensure community access to services and consider the impact of closures – with Treasury suggesting both options could be implemented.
In June 2023, the ABA rolled out a new Branch Closure Support Protocol “to improve transparency, ensure better communication, and provide improved customer support when banks close branches.”
The new Protocol governs the steps that banks must follow when closing branches, implementing the recommendations of the Federal Government Regional Banking Taskforce inquiry into branch closures that was initiated by the former Morrison Government in October 2021 and concluded by the Albanese Government in September 2022.