Why isn’t the government standing up to the banks?
In estimates I asked APRA (Australian Prudential Regulation Authority), what enforcement powers they have over the banks in regard to branch closures and enforcing the banking code of conduct.
They said they basically have none.
Which begs the question what is the point of having a banking code of conduct or a Regulation Authority if it isn’t going to be enforced?
This is yet another reason why people are becoming more and more cynical about politicians.
They won’t stand up for the people.
They prefer to instead stand up for the banks and the big end of town while the people they are meant to serve are left with nothing.
Things need to change. Vote for the party that will stand up for the people. People First. We will put you first. Always.
We will do that by establishing a public bank that will keep branches open, provide access to cash and offer long term fixed home loans.
Economics Legislation Committee
26/02/2025
Estimates
TREASURY PORTFOLIO
Australian Prudential Regulation Authority
Senator RENNICK: Hi, guys. How’re you going? Does APRA have enforcement powers over the banks at all? Are you able to enforce any action?
Ms Cole : Yes.
Senator RENNICK: The reason I ask is that we completed a Senate RRAT inquiry last year that looked into the closure of branches in the regions, because banks have closed thousands of branches in the last 20 years and they’ve now given this soft commitment not to shut any more branches until 2027. There was originally a banking code of conduct that said that banks couldn’t leave town unless they had done a proper consultation with the community and if they were the last bank town they couldn’t leave. That was completely trashed. They’ve closed branches and they’ve completely disregarded the banking code of conduct. Basically, we’ve got nothing out of this Senate RRAT inquiry. We’ve got nothing in terms of the banks being held accountable for shutting down branches. Is that something APRA is going to take more seriously? Because this is becoming a real issue.
Mr Lonsdale: We know that it’s a matter of great public interest. Our enforcement powers are centred around areas where there is a legislative obligation to do something that is not being met and where supervision is not working in the way that we want or where it’s against prudential standards. The code I think you’re talking about is the industry code. Is that correct?
Senator RENNICK: Yes. It’s an old banking code of conduct, yes.
Mr Lonsdale: The short answer is that it is not something we would look at and apply enforcement powers in that particular instance.
Senator RENNICK: So what mechanisms are there to stop banks from closing branches, full stop? I don’t care whether it’s in the regions or in the cities. I think the post office has a commitment to keep 4,000 branches open across the country.
Mr Lonsdale: Yes.
Senator RENNICK: Is there a similar type of commitment to make banks do the same, given that they have a massive social licence in the sense that they had a $188 billion Term Funding Facility during COVID at extremely cheap rates? They were bailed out in the GFC. You couldn’t short them even though they could short everyone else. We know that they’re too big to fail, so they have an inherent government guarantee. How do we hold these people to account?
Mr Lonsdale: I understand. I’ll ask Ms McCarthy Hockey to talk about one of the publications that we do and what’s in that publication that I think goes to your question. Fundamentally I think it’s a set of policy issues. It’s not an issue for APRA.
Senator RENNICK: Right.
Mr Lonsdale: But, having said that, we do have an interest in it. As well as being the prudential regulator, we’re also a data collection agency, and one of our data collections does look at points of presence. We collect that data to try to provide more transparency for policymakers to make judgements on. Therese, is there anything you want to add?
Ms McCarthy Hockey: We do collect that data and we do provide it to Treasury and other parts of government that are interested in it. It is clear that the trend is down. That is true. The context is that customers are using cash less in general, and that’s why that has happened. But across the six or seven years that we have been producing it we have seen a 44 per cent reduction in major cities and a 36 per cent reduction in regions—so it’s a little bit less in the regions—and this year is similar as well. We’ll be doing another collection coming into the June data and publishing that in October. We make every effort to make sure it has some value for those who are reading it. We know that people do look at the data, so we’ve made some effort around geographic data to make it easier to engage with, and we have a slice-and-dice capability, where we’ve drawn out much more of that perspective on Australia Post.
Senator RENNICK: Thanks. I’m aware of the information, but it’s ‘What are we going to do about it?’ day. I mean, you can have a set of management accounts, but if you don’t act on them and stop this from happening—
Ms McCarthy Hockey: That is beyond the powers of APRA. We do not have the powers. What we do is look after all of our depositors’ monies, regardless of the bank. The Banking Act is for every banking model that exists. It can be what you’d call the big banks with lots of branches. It can be small mutuals. Completely digital banks are also covered by the one code. So we have no powers, and the act does not relate to the way in which banks will relate to their customers. It is a matter for the banks.
Senator RENNICK: Okay.
Ms McCarthy Hockey: I can hear that you have real concern for the community, and we know because we collect this data. We did hear from the community. They want better data. We’ve done as much as we can. We want to try and keep feeding that back. But our powers are limited, because we relate to every bank in the system.
Senator RENNICK: So do you only have powers in regard to deposit taking? What about loans? What’s your relationship with AFCA? They’re not—
Senator Ayres: Before you get to that question, Senator Rennick, on the rural bank question, I think the way that APRA have described their role in that is absolutely right. The announcement that the Treasurer made a few weeks ago—I mean, I share your view. You can’t grow up in a country town and not understand how important banking services are for not just people who don’t necessarily use digital services but businesses and also just to have a shopfront in country towns. Having a liveable space in the main street of country towns matters—
Senator RENNICK: Absolutely.
Senator Ayres: It matters in terms of the availability of cash. It actually matters for those purposes as well. Thirty-six per cent of rural bank branches closed over the course of the last decade. The approach that the government has taken is set out in that agreement, firstly, with larger banks. The enforcement mechanism is what I think you were trying to come to in your question. Beyond the agreement and a position in writing set out to the Treasurer, there are signed deeds that underpin that, so there is an enforcement mechanism there. That takes us through to 2027. The government will be watching this set of developments very carefully. The last thing we need is an alternative government that is not committed to these issues and then having everything falling off a cliff in 2027. So we’ll be watching these developments very closely. It is an important holding position that delivers that outcome. Then there are these other outcomes with Australia Post and with, from memory, Suncorp and ANZ. There is a series of arrangements there that have been reached, so it is not just those big deposit-taking banks, because you want to incorporate more competition into the model. And thirdly, there are government’s reforms, the things we have done, including the arrangements with Armaguard and others that were reached earlier on in terms of ensuring that rural banks have access to cash for all of the reasons that you and I share. It is a very important set of questions, but it is not a set-and-forget thing where this arrangement is reached and then it just keeps getting rolled over. Through this delivery of services, whether it is banking, whether it is rural air services or whether it is a range of these sorts of commitments, we have to keep these country towns alive.
