Senate report recommends mandatory banking code of conduct to help protect regional Australians’ access to cash

A banking code of conduct is needed to make sure Australians living in rural communities can still access to cash amid a flurry of bank branch closures in country towns, a new Senate report claims.

The report released on Friday by the Senate inquiry investigating bank closures in regional Australia recommended the Australian Government “urgently develop” a mandatory banking code of conduct, along with seven other recommendations.

Citing figures from the Australian Prudential Regulation Authority, the report found more than 2100 bank branches were closed in Australia between 2017 and 2023 —‍ almost 40 per cent of branches.

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RMIT University finance researcher Dr Angel Zhong backed a code of conduct to protect country customers.

“Implementing a mandatory banking code of conduct in Australia would enhance consumer protection and transparency, ensuring fair treatment and accountability within the banking sector,” Zhong told 7NEWS.com.au.

“It would safeguard against branch closures through required community consultations and impact assessments, promoting financial inclusion, especially in rural areas.”

The report also recommends banks undertake meaningful consultation with communities before a branch is closed, as well as prepare and submit reports on the potential impacts of the closure and identify alternative financial services in the event of closure.

“By standardising practices and imposing penalties for non-compliance, the code would foster an ethical banking environment, rebuild public trust, and contribute to overall economic stability, addressing the failures of the self-regulated banking industry to safeguard the financial wellbeing of regional Australians,” Zhong said.

“The current self regulated banking industry has failed to protect the financial wellbeing of regional Australians.”

The report recommended a UK model of banking as an example, including its “three-mile rule” which ensures customers are provided with access to cash services within three miles (4.8km) of their homes—however experts predict this model would come with challenges due to Australia’s geographical size.

“The ‘thee-mile rule’ in the UK requires banks to ensure that customers have access to a physical branch or banking services within three miles of their location,” Zhong said.

“This rule aims to prevent communities from being left without local banking services.

“The implementation of similar measures in Australia, such as ensuring physical banking access within a certain distance, would likely be challenging due to the country’s larger geographical size and lower population density in many regional areas.”

Responded to the senate report, an Australian Banking Association spokesperson said banks took their responsibility to customers seriously.

“Australian banks take their responsibility to provide good services to their customers, wherever they live, very seriously,” the spokesperson said.

“Australia has unique geographical challenges with cash distribution that many other countries don’t face. Australia, for example, is 32 times the size of the United Kingdom.”

The spokesperson also said the banking sector remains “committed to ensuring cash continues to be accessible to customers” by providing fee-free ATM withdrawals at 85 of Australia’s most remote communities, as well as paying for cash services at 1800 regional “Bank@Post” post office locations.