The Council of Financial Regulators (CFR) and the Australian Competition and Consumer Commission (ACCC) have released a consultation paper on a potential regulatory framework for cash distribution in Australia.

The Government has committed to maintaining adequate access to cash for as long as Australians wish to use it.

The CFR and ACCC are exploring regulatory arrangements for the cash distribution system for consumers and businesses in rural and regional Australia, where cash distribution services are most expensive.

The paper notes that the decline in the use of cash for payments in Australia has challenged the economics of the cash distribution sector, upon which access to cash relies. The industry has now consolidated, with a single provider of national-level cash distribution services, which has helped to secure cash distribution services across Australia.

So that Australians can continue to pay with cash for essential items if they want to, the Government has announced that it will mandate the acceptance of cash for essential items, with appropriate exemptions for small businesses.

The preliminary view of the CFR and ACCC is that a regulatory framework is likely to be the most proportionate approach to meeting the public interest objective. A regulatory framework for the cash
distribution sector could incorporate:

• better visibility of cash distribution service providers and their capabilities and challenges
• crisis readiness and resolution powers to safeguard the continuity of critical cash distribution services
• regulatory powers to ensure the sector continues to function sustainably, effectively and efficiently by ensuring fair terms, third-party access, and service level standards for regional business customers
• powers for regulator(s) to enforce the framework and pursue penalties where appropriate.

Separately, The Reserve Bank of Australia (RBA) has published a Public Interest Framework for a Successful Account-to-Account Payments System

The RBA paper states that “Central to the success of the future system is its ability to provide all end users with access to payments options that are capable of meeting their needs, and that are cost-effective, reliable and safe. Achievement of these objectives will require effective industry governance arrangements, resilient infrastructure and competition and innovation among participants.”

With respect to a a bulk electronic clearing system replacement, the paper notes that a key capability is that “The system is capable of meeting user needs, with current use cases such as single credit transfers, direct debit, bulk, time-dependent payments and international payments being an indicator of these needs. .”

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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.