From the recent Regional Banking Taskforce final report to media stories dating back 20 years, mistakes in the APRA figures they quoted have thrown numbers out the window.

Australia’s banking regulator has been significantly over-stating regional branch numbers for decades due to false reporting by banking institutions.

The Australian Prudential Regulation Authority (APRA) became aware of the errors in May 2021 and has been quietly correcting the hundreds of instances where banks have claimed they are providing full branch services – including the face-to-face provision of cash – but have not been.

The data revisions, which have only partly been declared by APRA after the issue was raised in parliament by Senator Malcolm Roberts, throw the regulator’s “points of presence” statistics back to 2001 into chaos.

It means figures contained in the recently released final report of the Taskforce into Regional Banking are wrong, discrediting the already maligned Coalition initiative that was comprised mainly of representatives from the banking sector even further.

Media reports quoting APRA data between June 2001, when the annual data was first published, and October 19, 2022, are also tainted.

Background

APRA began publishing its annual “authorised deposit-taking points of presence” data as part of the Federal Government’s response to the 1999 Regional banking services: Money too far away? report prepared by a joint parliamentary committee of which Prime Minister Anthony Albanese was a member.

It was a direct response to calls from the community and the committee for better information about access to banking services, particularly in regional and rural areas.

The “points of presence” data is published every year around October and all financial institutions registered to operate in Australia are required by law to submit detailed information on each service delivery channel they provide, with sites having to meet a minimum criteria to be eligible to be classified as a branch.

The database has been considered the source of truth of bank numbers in Australia since it was set up and media is routinely directed to it by banks if asking for information on their branch footprints.

The corrections

Before APRA began correcting the errors highlighted in a story by The Regional (Big four banks casting a dangerous shadow, first published on May 11, 2021), it was reporting that regional Australia had 2201 bank branches in 2020.

The removal of 217 sites in the Bendigo and Adelaide/Rural bank network from the branch lists before the annual data release in 2021 (which was not declared by APRA) and 112 regional and 10 major city Rabobank sites before the 2022 release (which it did admit to) represents a 15 per cent difference in branch numbers between 2020 and now due to error alone.

The figures in the banking taskforce report, which was released before the APRA data was released on October 19, are now out by six per cent.

Most of the 339 sites that had been falsely reported to APRA as offering full branch services (minus a number the Bendigo and Adelaide Bank locations that fell off their lists even though they were still operating) were downgraded to the “other face-to-face” category.

The banking taskforce reported that this service channel was holding its own with a “more modest decline” of around 100 sites in the preceding four years however, this number would have been boosted by the falsely classified branches being moved into this service channel.

Making it almost impossible now to sort the errors from actual closures is the fact that APRA also altered historical Bendigo and Adelaide Bank data dating back to 2019 in the 2021 publication (again without  declaring such significant changes were being made).

When questioned in Senate Estimates in April, APRA chairman Wayne Byres stated – after APRA had worked with the bank to fix the hundreds of sites that had been incorrectly classified for decades in datasets from 2019 to 2021 – that he was not aware of any errors in the points of presence data.

APRA was asked this week why Mr Byres had not told Senator Roberts – and by extension Parliament – that he was aware of the errors and that the largest cohort of them had already been corrected by that stage.

The regulator did not answer the question.

A spokesman for the Treasurer Jim Chalmers said in July that Treasury was aware of the errors being corrected but it is now known when that information was made available to them.

Below are the questions that were put to APRA this week in full, accompanied by APRA’s response, in full.

The errors in Bendigo and Adelaide Bank/Rural Bank points of presence data had already been corrected and historic data over several years altered when APRA chairman Wayne Byres was questioned about long-standing errors in the ADIPOP database by Senator Malcolm Roberts in April this year. The Rabobank errors were yet to be corrected.

Hansard:

Senator ROBERTS: Thank you. The Quill awards for excellence in Victorian journalism at the Melbourne Press Club recently awarded journalist Dale Webster a regional Quill award for her investigation of the true extent of bank branch closures in Australia. The article awarded:

…busted layer upon layer of myths being perpetuated by the banking sector. It also blew the whistle on errors in official data that have been published by the government unchecked for decades.

So that’s your database that they are talking about, Mr Byres, isn’t it? How good is your database?

Mr Byres: I think the database is fine. The database is the facts that have been reported. I have no reason to think that there are problems with the underlying data.

Senator ROBERTS: We have just discussed that a branch is labelled as a branch even if it doesn’t have face-to-face operation?

Mr Byres: Well, as I said before, our definition says a branch should have—and you had the definition there—cash and then there was other face-to-face. That is the definition. That should be the way in which that is—

Senator ROBERTS: The database is wrong.

Mr Byres: Well, I’m not sure it is, but we can go away and have another look at that issue for you.

Question:  Why didn’t Mr Byres tell Senator Roberts (and by extension parliament) that APRA was aware of the errors and had already corrected the largest cohort of them by that stage?

Question: Why did APRA report in the 2022 ADIPOP publication that classification errors by Rabobank and another foreign bank had been corrected but made no admission the previous year that around double the number of errors involving Bendigo and Adelaide/Rural Bank had been revised in not only the 2021 data, but in historic data dating back to 2019 as well?

Question: Is APRA going to properly inform the industry, general public and media that its points or presence statistics dating back to when the ADIPOP database was first set up two decades ago have been significantly over-reporting service levels in regional Australia?

Question: How is APRA going to handle the correction of its statistics dating back to 2001?

Question: APRA and the Treasurer’s office were both in possession of a list of other incorrectly classified bank sites owned by ANZ, NAB, the Commonwealth and Westpac before the publication of this year’s ADIPOP data. Why did APRA knowingly publish incorrect data?

Question: Why did APRA only correct the two NAB sites that were raised by Senator Roberts in Senate Estimates and leave another 14 sites with exactly the same format that it was aware of in this year’s data?

Question: Given the significance of the reporting errors by the Bendigo and Adelaide Bank/Rural Bank and Rabobank, I ask again, has APRA/will APRA proceed with any disciplinary action under The Financial Sector (Collection of Data) Act?

Question: Is there anything APRA wishes to say in reply to the fact it has been significantly over-stating regional branch numbers for decades due to false reporting by banking institutions?

APRA’s response

You may attribute the following statement to an APRA spokesperson.

APRA has no further comment.

“Although there are no legal or prudential requirements for Australian banks to own or operate branches or ATMs, APRA collects and publishes data each year on bank branches, ATMs and other customer service facilities as part of its financial sector data collection role. APRA’s reporting standard ARS 796.0 Points of Presence includes a definition of a bank branch, which is only used for data collection purposes and does not place any obligations on banks in regards to whether – or how – they operate branches.

In response to questions about the continued appropriateness of the definition, APRA made inquiries into the data reported by banks, credit unions and building societies for inclusion in the annual authorised deposit-taking institutions (ADI) points of presence statistics publication. This included consideration of different branch structures and their alignment to the reporting standard definition. As a result, the latest statistics contain a number of revisions, including the recategorisation of 168 branches as “other face-to-face”. In cases where branches were staffed and offered customers the ability to withdraw or deposit cash using ATMs, APRA considered that those facilities continued to meet its definition of a branch. In line with recommendation seven of the Regional Banking Taskforce, APRA will commence a review of its points of presence collection, including the branch definition, when the points of presence collection is next subject to public consultation in early 2023.”

This article appeared on The Regional on 26 October 2022.

Related story: Regulator’s inconsistent approach to data law puts it on shaky ground.

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