USO plan for banks hits share snag

TELSTRA has one and, if the Federal Cabinet has their way, the four major banks in Australia will have one – an universal service obligation.

Essentially, the USO provides, as far as the communications

sector is concerned, access to facilities and services without discrimination based on region or any other aspect.

This is what governs the Telstra provision of services to rural and regional communities.

The Federal Government has now suggested that it will apply this same USO to the banking sector to ensure regional and rural banking services will be provided at the same standards that apply to metropolitan areas.

This is a laudable and praiseworthy objective.

The major obstacle the government is likely to face is that the four major banks are listed entities on the stock-market and, as such, owe an obligation to their shareholders to deliver a high level of dividends via higher profits.

Shareholders are not concerned with the altruistic and laudable motives of provision of services to rural and regional areas.

One option for the government, therefore, is to mandate the USO in the banking sector.

However, this would counter everything that has been done over the last ten years to deregulate the industry.

To now try and re-regulate the industry may cause considerable backlash.

The government could then have little option but to try to pressure the industry into submission.

This option is already under serious consideration. Over the next few months the pressure will intensify to try and get the banks to the negotiating table to improve the provision and delivery of their service to rural and regional communities.

In the past jawboning has had little effect.

It is hoped that, for the rural and regional communities’ sake, that it will have some impact this time.