The Minister for Financial Services & Regulation, Joe Hockey, today tabled the Government's response to the report on 'Regional Banking Services Money Too Far Away'.
The report was prepared by the House of Representatives Standing Committee on Economics, Finance and Public Administration under the chairmanship of David Hawker, MP.
The Committee observed that many of the difficulties about accessing banking services in country communities are essentially transitional.
The Government is acutely aware of the dynamic nature of the global and Australian financial services industry. In preparing the response, it has kept in mind the enormous structural changes sweeping the financial services industry and its impact on all sectors of the community.
The key issue from the inquiry is whether or not country communities have access to full transactional banking. In the immediate future, the evidence suggests that some form of face-to-face facility is required as technology, while it has the potential, has yet to supply an alternative that meets all the needs of the communities concerned.
However, that face-to-face facility does not require the existence of the traditional bank branch. There is a danger that any attempt to force retention of traditional financial services infrastructure on the industry is likely to constrain innovation and competition. As such, this is not in the long-term interest of the communities in question.
For instance, electronic channels have increased the number of outlets with which customers from rural and remote communities can access financial services and the times these services can be carried out.
The Committee identified a number of existing developments that will help country communities. In the future, most customers will be multichannel users and branches are one of those channels as are websites, phone calls, EFTPOS or ATMs. The Government believes that those financial institutions that neglect the branch network will risk related customer attrition.
Since the Committee reported, many of its recommendations have come to pass. The Prime Minister opened the first Rural Transaction Centre at Eugowra, NSW, on 29 October 1999, as part of a five year $70 million program to maintain basic private and government transaction services in country Australia. Over 200 communities have been or are currently involved in the Government's RTC Program already.
As well, the Governments RTC program is now available to support the installation of Giropost services, if that service is sought by the local community applying for RTC funding.
In addition, funds from the Regional Telecommunication Infrastructure Fund are being allotted to ensure country Australia can benefit from access to advanced telecommunications services.
Similarly, the Commonwealth Bank and Australia Post have announced a pilot joint venture to make available business financial services to 30 rural communities at their local post offices.
The Government supports the general thrust of the Committee's recommendation that the financial services industry should develop a model code of conduct or similar to manage the industry's change to alternative delivery systems. While this policy should not be prescriptive, it would provide rural communities with more certainty about future access to face-to-face services.