According to the Terms of Reference, “De-banking (or de-risking) occurs when a bank declines to offer or continue to provide a banking service. Key business affected include financial technology firms, digital currency exchanges, and remittance providers.”  It is recognised that “de-banking can have a devastating impact on de-banked businesses and individuals”. Long term, de-banking has the potential to “stifle competition and innovation in the financial services sector, and hence negatively impact Australia’s economy”.

Policy proposals

In August 2022 the CFR, together with AUSTRAC, ACCC and the Attorney-General’s Department, delivered its joint report "Potential Policy Responses to De-banking in Australia”. The policy proposals included:\

1. Collect de-banking data – providing additional data regarding the extent and nature of the problem with an end aim of informing future policies. 

2.  Introduce transparency and fairness measures – the five measures recommended were:
   •    banks document reasons for de-banking a customer;
   •    banks provide a customer with reasons for being de-banked;
   •    banks ensure a de-banked customer who is an individual or small business has access to the bank’s Internal Dispute Resolution procedures;
   •    banks provide a minimum of 30 days’ notice before closing existing core banking services; and
   •    banks self-certify adherence to measures.

3. Advise the major banks of the Government’s expectation that they provide guidance on their risk tolerance and requirements to the affected sectors.

4. Consider funding capability uplift within the affected sectors..    

      

Government response to advice

The Government released its response to the CFR’s advice in June 2023. In turn, their response to the proposals listed above were:

• Proposal number one was agreed with and going forward Treasury will work with APRA and the four major banks to “design and scope the voluntary data collection to ensure the data collected is useful and the process is iterative”.
• Proposal number two was supported, and it was agreed that Treasury would work with banks and AUSTRAC to ensure the measures are implemented “to the greatest extent possible”. 
• Proposal number three was also supported as well as encouraging major banks to publish information on their requirements and risk tolerance of the digital currency exchanges (DCE), FinTech and remittance sectors. 
• Proposal number four was noted. The Government listed its activities to date with AUSTRAC, its ongoing review of the AML/CTF regime in line with Financial Action Task Force international standards and reiterated its intention to license payment providers and DCEs as part of its modernisation of Australia’s financial system.

In his foreword to the Government’s response, the Hon Dr Jim Chalmers MP committed the Government to working “closely and iteratively with regulators, banks and the affected sectors to ensure that the implementation of the agreed upon recommendations is effective and achievable”.

Practice area (PA) content - 

The legal content of the Banking and Finance Practice Area is both wide and comlex, being subject to dynamic change. 

Extensive expert commentary addresses ASC's role, dispute resolution, foreign investment, insurance law, financial planning and retail and commercial banking practices. Specific areas within the banking and finance industry covered in detail include the law relating to guarantees, personal property securities and the impact of  the National Credit Regulation and Anti-Money Laundering regimes.

Superannuation is also covered in depth with commentary, a dedicated handbook and legislation and research material.