The Prices Surveillance Authority is looking at several options on ensuring basic bank services remain accessible to all Australians. The banks, predictably enough, have cried foul. They say the authority’s intervention will amount to reregulation of the banks. The authority, quite rightly, points out that where market forces fail, regulation can correct the failures. Few would want a return to the highly regulated banking and financial markets of the 1970s. There have been great benefits to competition. Consumers have been presented with greater choice and businesses have been presented with cost savings. However, the banks have been fairly single-minded in their determination to make the users of bank services pay for what they use and to end the cross-subsidisation of small-account holders by large-account holders.
They say this is the way to greater efficiency. That is certainly true when looked at from a purely economic perspective and true when viewed from a narrow single-industry perspective. But banking is different from other industries. It has an important social dimension. This dimension is hard to quantify in financial terms, but history shows that a stable currency and stable financial system is a key ingredient to political stability and ultimately civil peace. No-one would suggest that there is any serious danger in Australia of financial or political collapse. None the less it is important that the banks are aware of the underlying social element to their business. That social element has strengthened in recent times with the decline of cash and easily negotiable cheques as principal means of paying wages and social security.
In short, it is virtually impossible to live in Australian society without a bank account. In the past couple of years market forces have resulted in the gradual abandonment by the banks of their social role. It might be all right for other industries to assert they have no social role but health and safety, but it is not all right for the banks. This is because banking is not any business. It can only be conducted after obtaining a federal licence. The licence system gives both a monopoly advantage and an unwritten government guarantee that banks will be bailed out if they get into financial strife. In return, the banks should fulfil social obligations to small-account holders. If they do not they should be made to.