The government has responded to a review of de-banking in Australia, backing recommendations that banks provide data to APRA when they withdraw banking services and improve their transparency and fairness in relation to de-banking. Last October, the Council of Financial Regulators released a report saying a lack of data and no models to follow from other jurisdictions meant it had no concrete proposals to offer. The CFR worked with AUSTRAC, the ACCC and the Attorney-General’s Department on the review. De-banking occurs when a bank declines to provide banking services, typically a transaction account, or withdraws banking services from an existing customer. Remittance providers, digital currency exchanges and some types of fintechs are the businesses most often de-banked. The review recommended that voluntary data collection on de-banking be undertaken by the four major banks, working with relevant agencies. The government said it views data collection to be a fundamental aspect of any response. Treasury will work with APRA and the four banks to design a voluntary data collection program. On the issue of transparency and fairness, the review recommended that banks document their reasons for de-banking a customer and provide a customer with those reasons. It also recommended that banks give adequate notice before de-banking and that a de-banked customer who is an individual or a small business be given access to internal dispute resolution. The government said it supports the transparency and fairness recommendations and will work with banks and AUSTRAC to ensure they are implemented. It also supports a recommendation that the four major banks publish guidance on their risk tolerance applicable to digital currency exchanges, fintechs and remittance companies. It “noted” a recommendation that the government fund education and outreach on the matter. The banks are likely to push back on some of these moves. The Australian Banking Association rejected a recommendation of last year’s Independent Review of the Banking Code of Practice that the code specify that a customer should not be denied a banking service or have an account closed without the bank raising it with the customer and giving the customer an opportunity to respond. The ABA said banks need the ability to use discretion depending on the circumstances. It said that in some cases it is not appropriate to give a customer reasons for a decision. The previous government commissioned the CFR review because it was concerned that de-banking could stifle the development of innovative tech and financial services businesses. The current government agrees, saying it “recognises the seriousness of de-banking and understands that inaction on the issue will stifle competition and innovation in the financial services sector”. The review said: “Developing policy options to address de-banking is challenging, with no widely acknowledged solutions that respect the principle that banks are commercial enterprises and must manage their own risks and resources. “But banks also have corporate social responsibilities and they must ensure that core banking services are reasonably accessible across the community.” It also noted that there is no current power to mandate any of the measures it recommended.