$10 ATM fee in some indigenous communities

The continued practice of people in some indigenous communities being slugged up to $10 in fees just for account balance inquiries on automatic teller machines (ATM) is blatant and unfair, a senate inquiry has been told.

"Blatant unfairness" by new owners of ATMs in remote communities intent on increasing financial returns is hurting customers, many of whom are low-income indigenous Australians, the Consumer Action Law Centre's (CALC) says.

CALC co-chief executive Catriona Lowe said bank customers were copping ATM fees of up to $10 when they transact, including for simple balance inquiries to check if they have sufficient funds before making withdrawals.

The situation was "highly unfair", she told the Senate Economics Committee during a public hearing on banking competition held in Melbourne on Tuesday.

Ms Lowe's comments came after Australian Financial Counselling and Credit Reform Association executive director Fiona Guthrie's study of ATM fees found they had reached $10 in some communities, which ABC TV reported last month.

The high fees were charged mainly by third party providers who installed ATMs in remote communities when ATMs run by the big four banks were withdrawn, CALC policy director Nicole Rich said.

Unlike banks, these providers lacked other revenue sources and were operating ATMs in rural areas where the level of competition wasn't enough to push down ATM fees, she added.

The Reserve Bank of Australia had been tasked with investigating the issue, but had yet to report its findings, she said.

The (banking) industry had been aware of the issue for some years, but had taken no action, CALC said.

"It's time to address the matter of fees on transaction accounts and ATM fees, which unfairly impact marginalised Australians," the Brotherhood of St Laurence's financial inclusion manager, Gerard Brody, told the committee.

The charity group supports the federal government's moves to improve banking sector competition, but thinks the reforms should be broadened from a focus on the mortgage market to other areas of banking.

"In recent years, banks have shied away from providing consumer credit for small amounts, instead choosing to focus on more profitable services," he said.

"Lack of access to personal loans for under $5,000 is a real problem for many households, who rely on such loans to acquire assets and make necessary expenditures, like fixing the family car or buying school textbooks for their children."

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