Banks authorised to co-operate

by Madison Utley01 Apr 2020

The ACCC has provided a second authorisation for the Australian Banking Association (ABA) and banks to co-operate to provide supplementary relief packages for individuals and businesses affected by COVID-19.

The authorisation protects against court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. The ACCC grants authorisations when the public benefit of the decision outweighs the public detriment, but can review its decision at any time.

On 30 March, the ABA applied for authorisation on behalf of its current and future member banks and their subsidiaries to “discuss, agree, and give effect to any contract, arrangement or understanding between them for the benefit of their customers” in order to better provide financial relief and assistance to customers and support government initiatives.

The authorisation applies to all ABA member banks who agreed to participate: AMP Bank, ANZ, Bank Australia, Bank of Queensland Limited, Bendigo and Adelaide Bank Limited, Commonwealth Bank of Australia, HSBC, Macquarie Bank, National Australia Bank, Suncorp Bank and Westpac.

Upon granting the interim authorisation, the ACCC gave the conditions that the ABA:

  • Seek the approval of the ACCC where the coordination by member banks involves agents or suppliers that member banks compete with
  • Notify the ACCC of financial relief programs or other arrangement arising from the proposed conduct prior to its implementation

The first “urgent” interim authorisation came on 20 March, enabling the ABA and banks to work together to implement a small business relief package which allowed for the deferral of P&I repayments for loans to small businesses impacted by the pandemic.

“We recognise the public benefit from enabling banks to respond quickly to provide a relief packages to businesses and individuals affected by the pandemic,” said ACCC chair Rod Sims.

“Individual banks can still offer more favourable and tailored terms to business customers outside of this proposed agreement.”

“The conditions provide transparency over what is proposed and if major concerns are identified, the ACCC is able to revoke the interim authorisation, or require amendments.”

The banks will also be able to coordinate to ensure customers can access services, including, where possible, some counter services, in a range of locations and at various times.

The ACCC did not conduct a public consultation on the matter as it concluded there was an urgent need for member banks to commence discussions and offer financial relief packages given the “unprecedented circumstances” impacting the economy and “compelling nature” of the public benefits to result from the authorisation.

A public consultation will be conducted “in the coming days”.