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Australia

The Australian financial services sector has recently undergone a series of structural changes, effectively limiting the access to basic financial services for low-income and rural communities. Developments in the delivery of financial services, such as automated and internet-based banking, as well as a series of high profile bank mergers have led to the overall reduction in bank branches that serve these types of areas. Researchers studying the issue have found that the loss of access to a bank account or the inability to open a bank account is a primary barrier to economic progress in Australia, making a strong case for the continued study and regulation of financial service providers and their ability to maintain and improve access to these services in low-income and rural areas.

Investigations of Financial Exclusion

In 1999, the Australian House of Representatives Standing Committee on Economics, Finance, and Public Admin-istration released a report documenting the loss of banking services in low-income and rural areas. The report is the culmination of ongoing discussions with the banking industry to develop a series of recom-mendations on expanding access to financial services in these areas and developing alternative delivery mechanisms.

In 2001, the Financial Services Consumer Policy Centre at the University of New South Wales Chifley Research Centre followed up the Committee's report with a comprehensive analysis on the state of social exclusion in Australia. The report found that financial exclusion was primarily caused by the high cost of service provision and the barriers to access for certain income and minority groups. The center recommended the creation of a Social Banking Charter that would spell out regulatory obligations to investigate financial exclusion, set up a branch closure protocol, promote alternative delivery of services, and issue standards for the provision of basic bank account.

Taking these recommendations under consideration, the Australian Prudential Regulation Authority began requiring bank branch distribution data from all authorized deposit-taking institutions in 2002. The publicly available data updated annually and lists the type of branch, the services provided, and whether or not the branch serves a rural or metropolitan area.

Banking Industry Opposes Regulation

The Australian Bankers' Association (ABA) committed to organize a Working Group to address each of the reports recommenda-tions, particularly the issue of regional and rural service provision. The ABA noted that at least four of Australia's largest banks have placed a moratorium on bank branch closings in rural areas and stated that, with a few exceptions, nearly all Australians currently have access to a bank branch within 20 kilometers from their communities. Taking these factors into consideration, the ABA opposes any additional regulation or govern-ment imposed Social Charter, such as a US-styled Community Reinvestment Act.

References

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