Two significant issues facing consumers across Australia have been ATM access in remote Indigenous communities, and the levels of competition and transparency in the ATM industry. Whilst positive steps have been taken to solve issues of access in remote communities, regulators have so far dragged their feet and ignored prompts to remedy issues in the areas of competition and transparency.
In 2009 the Reserve Bank of Australia introduced the Access Regime for the Designated ATM Payment System. This Regime was implemented to ‘promote competition and efficiency in the Australian payments system’. The Payments Systems Board of the Reserve Bank stated that the reforms would:
- ‘make the cost of cash withdrawals more transparent to cardholders and place downward pressure on the cost of ATM withdrawals;
- help to ensure continued widespread availability of ATMs by creating incentives to deploy them in a wide variety of locations, providing the consumers with choice and convenience;
- promote competition between financial institutions; and
- make access less complicated for new entrants, and therefore strengthen competition.’
Whilst the intention of the reforms was admirable, several commentators including CFA member CHOICE have noted that in practice there is little evidence that the reforms have actually delivered these benefits.
The imbalances and anti-competitive issues within the industry prompted the Treasury and Reserve Bank to create two Taskforces, one to investigate access in remote Indigenous communities and the other to investigate competition and transparency.
On May 25, following the release of the ATM Taskforce – Report on Indigenous ATM Issues, the Commonwealth Government announced that the Australian banking industry, and two independent ATM companies, will provide 76 transaction free ATMs across very remote indigenous communities. This action will be facilitated by the RBA which released a draft variation of its Access Regime to provide it with greater flexibility to allow for the new ATM arrangements.
This extension of transaction free ATMs to remote Indigenous communities greatly increases access to affordable ATMs, and will more likely deliver the intent of the original reforms by the Payments Systems Board of the RBA to those using ATMs in remote Indigenous communities. Along with this, the announcement will be a welcome relief to many people who are currently facing much higher than average ATM transaction fees.
ASIC Commissioner Peter Kell supported these actions, stating ‘We welcome this move by the banks and ATM providers. This is a responsible and sensible step that will benefit Indigenous consumers’.
CHOICE, however, was more circumspect about the steps taken by the RBA, Government and Banking sector. Whilst CHOICE ‘applaud[ed] the initiative to provide free ATM transactions in very remote Indigenous communities’, the Head of Campaigns Matt Levey said that CHOICE believed that ‘the Government’s response fails to recognise that ATMs are not working in consumer’s best interests’.
CHOICE called upon the government to task the regulators ‘with publishing regular information on the location, costs and revenue generated by the ATMs as well as the amount of balance enquiry fees paid by Australian consumers’.
The publishing of information about the revenues of ATMs, and the specific fees which they charge, would allow consumers to make more informed decisions regarding service providers and ATM selection. Making these reforms and promoting transparency would increase competition and ultimately lead to a better environment for consumers across Australia.
The May 2012 ATM Taskforce – Report on Transparency and Competition echoed many of these positions and recommended that ‘To further enhance transparency and competition in Australia’s ATM industry, the taskforce recommends that consideration be given to requiring upfront disclosure of ATM direct charges’ and ‘that ATM deployers should regularly provide data on their pricing, activity and costs to the Reserve Bank for it to disseminate in an appropriate form’.
This report however, unlike the report into ATMs in remote Indigenous communities, has not yet been adopted by policy makers.
Instead the government responded to these recommendations by asking ‘the taskforce to consult further with the ATM industry on ways to ensure consumers are aware of any ATM fees up-front so that they can quickly move on and find a cheaper option if they don’t wish to pay a fee for convenience’ and to ‘ask the Reserve Bank to more regularly collect and report data on the ATM industry’.
The Government’s response did not signal the kind of changes in policy direction which would be required to improve levels of competition within the ATM industry. Without significant steps towards greater competition and transparency the fees charged by ATM providers will not decline and consumers will continue to pay high prices to access their money.
The Government and RBA’s failure to introduce reform with regards to competition and transparency in the ATM industry is costing Australian consumers.
Whilst the actions of the RBA, Government and banking sector to provide transaction free ATM services to remote indigenous communities are a significant, substantive, and long overdue step in the right direction, there still looms serious questions over ATM fees and the manner in which they are advertised and charged to consumers.The government and regulators should act to promote competition and transparency to ensure that all consumers across Australia receive the best service at the lowest cost.