The Australian Competition and Consumer Commission announced today that it proposes to deny authorisation to a proposed arrangement by 10 member banks** of the Australian Bankers Association to collectively agree to offer a basic bank account with agreed minimum features as the proposal does not expand consumers' choice.
"The ACCC strongly supports the need for improvements in the current level of banking services available to low-income consumers", ACCC Chairman, Professor Allan Fels, said today.
“However, the majority of basic banking products available already provide a higher number of fee-free transactions and satisfy several of the other features proposed under the basic bank account initiative.
“The ACCC is concerned that the current proposed structure has the potential to dampen competition between the major banks and result in the proposed minimum features becoming the industry standard.
"The proposed basic bank account does not go far enough, but the ACCC would welcome a substantially enhanced initiative.
"The ACCC considers that agreed minimum standards for a basic bank account available to low income consumers could benefit the public by reducing the cost of banking for low income earners provided that the account offered a substantial improvement in the features that are currently proposed".
The proposal provides for banks to offer minimum features to holders of a health card, senior's card and/or a pensioner card. The minimum features offered under the basic bank account include no account keeping fees, no minimum monthly or opening balances, an unlimited number of deposits and six fee-free non deposit transactions (which includes up to three over-the-counter withdrawals).
A large number of consumer groups expressed concern at the low level of features proposed by the proposal.
Consumer groups pointed to the relatively small number of fee-free transactions provided under the proposal, the fact that balance inquiries will be counted as part of the six fee-free transactions and the level of dishonour and/or account overdrawn fees which would be applied to basic banking products.
The ACCC's draft decision followed extensive ACCC consultations with consumer groups, financial counselling agencies and several government departments.
The ACCC would welcome a revised proposal by the ABA which address its concerns, and will be providing a further period for consultation with interested parties before it makes a final decision.
*The Trade Practices Act 1974 prohibits competitors agreeing to work together in a way that substantially reduces competition between them. Authorisation provides immunity from court action arising from such agreements but can only be granted where the ACCC is satisfied that the public benefit arising from the conduct outweighs any public detriment.
**The ABA applied for authorisation of behalf of the National Australia Bank, Commonwealth Bank, Australia and New Zealand Bank, Westpac Banking Corporation, Bank Western Australia, Adelaide Bank, St George Bank, Suncorp Metway Bank, Bank of Queensland, and Bendigo Bank.