APRA, Treasury to act on major lenders de-banking fintech

Jim Chalmers said: “Our response highlights the government’s commitment to taking action on de-banking, and our intentions to balance support for affected businesses, while also acknowledging banks are commercial enterprises and must manage their own risks and resources.”

Banks may have to document reasons for de-banking customers, provide them with reasons for being de-banked, and ensure affected customers have access to bank dispute resolution procedures. Banks may have to provide at least 30 days’ notice before closing a customer’s services.

The measures come after Senate committee hearings in September 2021, where global payment company Nium said Australia was the only country out of 40 where it had bank accounts shut down without adequate explanation, after two of the big four banks cancelled banking relationships without providing it with an opportunity to illustrate its approach to compliance. This forced it to use a multinational bank for its Australian business. FinTech Australia told the same hearing about 100 fintechs had bank accounts closed and most were “are afraid to speak out, for fear of further alienation”.

In another hearing in January last year, London-based Wise accused Australian banks of anticompetitive behaviour in refusing to provide it with banking services over several years. Wise competes with the banks by providing cheaper cross-border payments through an app.

AUSTRAC expressed concern to the committee that de-banking would reduce visibility of transactions passing through the payments system, and make it harder to monitor the economy for financial crime.

The Australia Financial Review has reported this week about tighter restrictions on payments to crypto exchanges. This includes Cuscal and the major banks putting holds on customers wanting to transfer money to crypto exchanges along with monthly limits.