FURTHER RESPONSE TO ALP BANKING POLICY

Sydney, 21 June, 2004:  The Australian Bankers’ Association (ABA) said that individual banks have done much in recent years to address the policy issues identified by the Australian Labor Party (ALP) in its election banking policy.

Banks understand their broader responsibilities, not only to customers, staff and shareholders, but also to the wider community. In recent years, the industry and individual banks have moved to implement policies that will ensure all Australians have fair and reasonable access to banking services.

International studies show that Australia has amongst the lowest interest rate margins, and that fees and charges are roughly equivalent to the average of other comparable countries.

For further information:

Heather Wellard
ABA Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439

Attachment 1

ALP proposed  initiatives	What is happening?
Basic Bank Account – 15 fee-free transactions	Banks provide these accounts. The ACCC said there was a competitive market for basic bank accounts, and refused to allow one to be authorised.   The best product in the market exceeds the ALP’s benchmark providing unlimited withdrawals.   Another product provides 16 fee-free transactions.
Branch closures	Official APRA data shows that branch numbers in Australia are increasing. This is in addition to the increase in electronic banking services which allow 24-hour, 7-days a week services.   All of Australia’s major banks have regional branch closure moratoriums in place. Two of these moratoriums have existed for over 5 years.   The industry has had in place for three years a Branch Closure Protocol giving 3 months notice of a closure. The industry agreed this month to extend this to 6 months where no other banking facility existed.
ATM pricing – city / country differential	Banks do not differentially price now, in fact, some banks provide cheaper banking to people living in the regions.   The Governor of the Reserve Bank, Ian Macfarlane, has made it clear that he does not expect banks to differentially price. He said on 4th June 2004 that the banks would be “mad” to do it.   Two major banks have already said they won’t differentially charge city versus country ATM users.   ABA cannot give an industry-wide commitment because this would contravene the Trade Practices Act prohibitions on collective price setting and such a commitment would require ACCC authorisation.
Credit card health warnings	The banks have extensive disclosure requirements – amongst the strictest in the world.   In March 2004, ABA announced changes to credit card marketing practices, including a customer statement warning about the financial problems of changing circumstances e.g. lost their job.
Debit card reform - interchange	ABA agrees with ALP’s position which is the same position advocated by the ACCC.
ACCC monitoring of fees and charges	Informal monitoring of fees and charges has been underway for many years. Formal monitoring is anti-competitive.   Widespread fee exemptions currently exist, including for seniors, social security recipients and students.
Micro-financing	Some Micro-financing schemes are already in-place, the market’s response to these issues is emerging
Financial Literacy program	The banking industry, individual banks and the Federal Government all have longstanding programs in-place to advance financial literacy.

ENDS