The government is hoping to reflect the digital advancements made in payments, such as buy now, pay later and cryptocurrency.
As part of its plan, it has requested advice from the Council of Financial Regulators (made up of the Reserve Bank of Australia, APRA, ASIC and Treasury) on the underlying causes and potential measures the government could roll out in response to debanking.
The council has been set a mid-2022 deadline to provide advice on policy options.
As set out in its December statement, the CFR has backed the formation of a working group to focus on debanking in the fintech, crypto asset and remittance sectors.
Treasury will lead the working group, which in addition to the council agencies, will include the ACCC, AUSTRAC and the Department of Home Affairs.
In response to the planned payments and crypto asset reforms, CFR has also backed the terms of reference for a working group on the regulation of the crypto ecosystem.
The regulators have begun to look into debanking after the Senate select committee on Australia as financial and technology centre recommended the government develop a process for businesses that have been dumped by their banks.
A number of fintechs have claimed they had been offboarded by their banks, due to anti-competitive motives. A lender had made such a claim to industry body FinTech Australia, as captured in the Senate committee’s final report.
Further, Revolut Australia, which is in the process of seeking a local banking licence, said it had experienced risk aversion from the banks, related to its FX and remittance activity.
One of FinTech Australia’s members was said to have been debanked four times from 2018-20, while 23 members in total had experienced being dumped.
The big four banks had explained to the Senate committee why they might decide to debank businesses, with reasons including risks related to financial crime, commercial considerations, fraud or other convictions; or businesses becoming deregistered.
In July, Westpac admitted to debanking around eight fintechs in the year to May, with the reason that they had operated in higher-risk areas or had higher-risk aspects.
Speaking on the findings of the Senate committee in October, committee chair and Liberal senator Andrew Bragg called debanking “debilitating”.
“It destroys the ability of Australia’s small business to disrupt and deliver new ideas,” Mr Bragg said.