Senator JOYCE—Ms Wakeford, you had some favourable things to say regarding banks. Throughout your discussion, you congratulated the banks a number of times for certain approaches they have made. Has the Brotherhood of St Laurence had a strong interaction with the banks? Have you had and currently are you having ongoing discussions with them?

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Ms Wakeford—We have been interested in credit and loans, particularly for low-income people. So we have been working with the banks for quite a few years, partnering around products and delivering things for low-income people. In addition, we have been discussing what we feel is important for our customers and consumers so that we can talk to the banks more on a one-on-one level about some of those things we think should be happening.

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Senator JOYCE—So you get good access with what level in the bank?

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Ms Wakeford—A range of things. We are partnering with ANZ in several projects, I know that NAB are doing quite a bit of work, particularly with a few community agencies, and we have had conversations at the CEO level.

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Senator JOYCE—Without speaking out of turn, a clearly identified issue seems to be the differentiation between service fees and default fees—fees for which people are not getting a service but which are just a punishment for what they have done. These fees are excessive and, as you say, they double up on themselves, and one feeds off the other; the next thing you have is multiple default fees. If you have no money, you just cannot afford them; you cannot afford to pay that money. Banks would be fully aware of this; they are smart people. In your discussions with them, what is their justification for multiple and excessive default fees, the mechanisms that they have for taking money off people—money that is not really attributable to effort that they put in but more that they have got you where they want you and now they can take it off you?

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Ms Wakeford—There were conversations with the ANZ and now they have only the one fee per month regarding credit, so you cannot get multiple fees on fees. Some of those discussions have worked in achieving that. They often talk about it being a service—that you do not want to be embarrassed when you go to a restaurant, pull out your credit card and find suddenly that you do not have the credit necessary to cover the cost of your meal. It has been said, ‘To save you the embarrassment, we’ll overdraw, but we’ll provide a fee for doing so.’ In that way it sounds like a service.

If that is the case, we would say that a lot of the people we are dealing with do not eat in restaurants and they are not going to get embarrassed; they would prefer not to have that facility where they have the capacity to overdraw their accounts. If you view it as a service, my thinking would be that it could be put to you, ‘Well, this is a service we can offer you,’ and then you would say, ‘No, I don’t want that service,’ or, ‘Yes, I do, and I accept the associated fees.’ However, at the moment it is there and available and, depending on your bank, it will only be taken away at your request. If it is a service, I would think that you would say, ‘Yes, I want that service,’ or, ‘No, I don’t want that service.’

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Senator JOYCE—Have you had discussions with the banks about their providing the product of a basic bank account—that is, ‘This is how it will operate. You can’t overdraw it. There will be no multiple fees. It’s a stock standard product and this is it. If you are doing it tough, we strongly suggest that this is the banking product you use, but it’s got no bells and whistles. If the money is there, you’ve got; if it’s not there, you won’t have it’? Have you had discussions with them about providing a product like that?

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Ms Wakeford—Most of the banks over the last couple of years have introduced concession accounts. Our concern is that most people are not aware of them. We think a penalty fee of zero or $10 is reasonable. But our problem is that the fees are not publicised and many of those who form our customer base are not aware of them. Often, when looking at the bank statements of people who come in, it becomes obvious that they are using the wrong product. There are others products out there, but the problem is trying to find out where they are and how to get them. Our position would be that, when someone opens a bank account, those questions are asked so that they do get the right product that suits them rather than the product going around and being promoted at that time.

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Senator JOYCE—So the products are there; you just have to make people aware of them. Thanks you.

Senator JOYCE—Mr Bell, I have been looking at the banks for a while and I reckon it is a great business and I might open one up. What do I have to do?

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Mr Bell—You have to get a licence from APRA.

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Senator JOYCE—A licence from APRA.

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Mr Bell—And you have to have sufficient capital.

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Senator JOYCE—Sufficient capital.

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Mr Bell—And you have to be able to meet all the regulatory requirements of the states and territories, which would be of considerable expense to you.

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Senator JOYCE—Considerable, I would say, and sufficient capital. What sort of capital would I be looking at, roughly? Give me a ballpark figure. A billion?

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Mr Bell—I would say several billion dollars.

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Senator JOYCE—Thank you very much. We have just said that there is an effective market. A market talks about the easy entry and exit of people into the market to reflect the supply and demand issues that are within that market. Quite simply spelt out there is that banking, by its very nature, does not allow people to easily move into the market and move out of the market. There will be a certain number of players who, by reason of their status quo, history, position in the market, other government policies, foreign investment policies and a whole range of things, have a particular position in the market that is in a way quarantined by their own dynamics and the dynamics of legislation that fits around them and puts them into a very good position.

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Mr Bell—That would be correct. There are certainly barriers to entry to join. There are two sides to that coin. You do not want any person just hanging up their shingle and opening a bank. That is where you get into trouble.

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Senator JOYCE—But now you are talking about certain restrictions on it, because surely the market would just weed us out. I know it is a ridiculous hypothesis.

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Mr Bell—Sure.

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Senator JOYCE—You cannot have just anybody opening up a bank. But the other side of the argument is that, when you use the market theory for banks, it is a convenient position because you are not truly in a market—because there are certain protections and certain mechanisms and you actually rely on the government to exclude other people from coming in to competition with you, there are in essence certain responsibilities.

You might say, ‘Well, I would prefer they weren’t regulated,’ but there are certain responsibilities that go along with acting as a bank—such as being a beneficiary of one of the safest nations in the world, a democratic nation, a transparent nation where you can act. It is not like worki