The federal government will keep an eye on the big four banks amid concerns customers will end up paying one way or another for the decision to scrap ATM withdrawal fees.
Commonwealth Bank, Westpac, ANZ and NAB all announced on Sunday the $2 fee to take money out of a competitor’s ATM would be abolished due to its unpopularity.
It’s set to cost them about $500 million a year.
Treasurer Scott Morrison welcomed the move, accrediting the change to pressure from the government for banks to put their customers first.
“I’m pleased they’ve taken this decision,” he told ABC radio on Monday.
Mr Morrison wasn’t convinced the move will lead to the banks shutting or cutting back their ATM services because people would simply walk away.
But the government will be watching closely.
“We’ll certainly be looking – as we always do – at whether they are acting in an uncompetitive way or passing on some of these costs through some other back door or misrepresenting themselves,” he said.
Australian Bankers’ Association chief executive Anna Bligh insisted the banks would wear the cost of scrapping the ATM fees and not seek to raise other customer charges.
“It’s a hit to the bottom line … They have to be prepared sometimes to take pain in order to keep those customers,” she said.
Labor financial services spokeswoman Katy Gallagher said ATM fees had been unfairly chipping away at people’s savings for years.
She said there was no doubt Labor’s repeated calls for a royal commission had led to the decision.
South Australian Treasurer Tom Koutsantonis, meanwhile, labelled the move hypocritical, given the big four “cried poor” over his state’s proposed bank tax yet were willing to forgo $500 million.
The Turnbull government has focused much attention on the banking sector, including making the big four’s CEOs appear before a regular parliamentary committee hearing.
It has released draft legislation to give the Australian Prudential Regulation Authority the power to cap bank executive salaries, delay bonuses and drive directors out of the industry if they are guilty of wrongdoing.
Top executives will be forced to defer at least 40 per cent of their pay for four years under the measure.
Ms Bligh is critical of the relatively short timeframe the industry has been given to consult on these changes.
“This is not good public policy making,” she told ABC radio.
But Mr Morrison questioned why the government would want to wait.
“Australians want us to do something now,” he said.
Mr Morrison said discussions had been happening since February and he would introduce legislation when parliament returns in October.
“I know it’s a quick turn around but I’m not mucking around,” he said.
APRA recently launched an inquiry into Commonwealth Bank after a series of issues raised concerns about its governance, culture and accountability.