Australian Banking Association Limited - CIT Sustainability Measures

On 27 June 2024, the Australian Banking Association (ABA) lodged an application for authorisation with the ACCC. On 26 July and 4 September 2024, the ABA sought to vary the proposed conduct.

As varied, the ABA is seeking authorisation as follows:

CIT Sustainability Measures

Two or more of the Applicant, the Funding Parties, the RBA, Treasury and Armaguard propose to discuss, share information, reach agreement on and/or implement (as relevant) the following assistance measures by one or more of those parties for the purpose of supporting wholesale cash viability and access to cash by businesses and members of the public:

(a)              short term financial contributions to Armaguard on the Relevant Terms;

(b)              operational sustainability and efficiency measures that can be implemented across services provided to each of the Funding Parties under their respective service agreements and/or Armaguard's CIT business, which may include (but is not limited to):

(i)                standardised commercial deposit products;

(ii)              pre-registration of collection values;

(iii)            standardisation of coin order values and format;

(iv)            the implementation of a Direct to Depot model;

(v)              greater access to bank branches for services;

(vi)            safe and same day value arrangements;

(vii)          universal coin bins;

(viii)        use of integrated safes by retailers;

(ix)            a simplified discrepancy process; and

(x)              standardised treatment of cassettes / bags on site.

(c)              the development of an Independent Pricing Mechanism which is (i) analogous to pricing which would apply to regulated services, and (ii) which does not unreasonably discriminate between CIT users

(d)               the in-principle agreement to apply (but not implement) that Pricing Mechanism in respect of each (future) cash services agreement with each of the Funding Parties,

(each or together CIT Sustainability Measures).

  For the purposes of (a) above, the Relevant Terms are:

(i) that funding is conditional on certain agreed requirements including that Armaguard reports on its progress in meeting the milestones for implementing merger integration efficiencies set out in its business plan, that Armaguard complies with its obligations under the Funding Parties' cash services agreements and that Armaguard provides information to an advising accountant if requested; and

(ii) if any Applicant’s cash services agreement is renewed or extended during the Term, any pricing uplift which would otherwise be payable by the relevant Applicant under that renewed or extended cash services agreement will only be effective and payable by the relevant Applicant after and with effect from the expiry of the Term.

(the Proposed Conduct).

CIT Sustainability Measures Consultation

Two or more of the Applicant, the Funding Parties, the RBA, Treasury and/or Armaguard propose to share information and consult with COBA and/or other Proposed Authorised Parties regarding the assistance measures listed at (b) and (c) above for the purposes of Armaguard's future planning with respect to its CIT business.

For the duration of interim and final authorisation, the Applicant undertakes to provide quarterly reports to the ACCC setting out the progress that has been made in relation to the Efficiency Measures and the development of the Independent Pricing Mechanism, including the consultation that has occurred with CIT users other than the Funding Parties. The quarterly reports must address the consultation that has occurred with CIT users other than the Funding Parties, including on the extent to which the proposed Efficiency Measures may be reasonably practicable for those CIT users to adopt in their businesses.

On 27 May 2024, the ACCC granted authorisation (AA1000654) to the ABA and other industry and regulatory stakeholders to collaborate on development of short, medium and longer-term responses to support ongoing access to cash, the implementation of which would be the subject of separate applications to the ACCC. Application AA1000674 is made to facilitate the further development and implementation of initiatives to respond to acute issues within the cash distribution system and to ensure the ongoing sustainability of the wholesale cash distribution network and access to retail cash services in Australia, pursuant to Authorisation AA1000654.

Authorisation is sought until 30 June 2026.

The ABA has requested interim authorisation to enable participants to engage in the proposed conduct while the substantive application for authorisation is being assessed by the ACCC. The ABA requested interim authorisation in respect of paragraph (a) of the Proposed Conduct prior to 3 July 2024, and for the balance of the proposed Conduct prior to 31 July 2024.

On 3 July 2024, the ACCC granted interim authorisation with a condition in respect of financial contributions on certain terms.

On 29 July 2024, the ACCC provided the letter to the ABA outlined below regarding the ABA’s request for an ACCC decision on interim authorisation for the balance of the proposed Conduct prior to 31 July 2024.

On 12 September 2024, the ACCC revoked the interim authorisation with a condition dated 3 July 2024 and granted a new interim authorisation for an expanded range of conduct with 4 conditions.

An indicative timeline for the ACCC’s assessment is set out below.