2026/27 FINANCIAL POLICIES · Attachment 10 - Financial Securities (Bonds and Guarantees) Policy

Attachment 10 – Financial Securities (Bonds and Guarantees)

 • Agreed works as a condition of subdivision or other approvals where the requirement for a financial
   security is stated in the development agreement.
 Types of financial securities accepted by Council

 The only forms of security accepted by Council are:

 •   Cash bonds: a performance bond that is held in Council’s trust account
 •   Bank guarantees: an unconditional performance guarantee given by a bank.

 Council will not approve or accept the following forms of security:

 •   Letters of credit
 •   Mortgage over land
 •   Related party guarantee
 •   Insurance bonds: an unconditional performance bond given by an insurance company
 •   Cash retentions (where are percentage of the contract value is withheld from supplier invoice
     payments) except where these maybe required by legislation such as the Building
     Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020
     (BIFOLA Act).

 Determining the value of a security

 The appropriate value of a financial security required to secure an obligation, is determined in
 accordance with the specific guidelines and procedures adopted by the branch within Council that is
 responsible for managing the underlying transaction. The following methods are used to determine
 the value of a required security:

 •   Council’s adopted Fees and Charges Schedule
 •   Onsite inspections and/or assessments of works undertaken as a condition of subdivision or other
     development approvals
 •   An agreed percentage of the sum of a contract based on risk or other legislative requirements.

 Requirements for financial institutions

 The reputation and credit rating of an issuer of a financial security is one of the fundamental
 considerations of this policy to ensure that Council’s exposure to credit risk is minimised.

 The Policy Guideline, “Guidelines for the Acceptance, Management and Release of Financial
 Securities” sets out the minimum requirements for all financial institutions issuing bank guarantees.

 Documentation requirements

 The construction of the financial security document is another fundamental consideration of this policy
 to ensure that all bank guarantees are irrevocable and payable on demand.

 The Policy Guideline, ‘Guidelines for the Acceptance, Management and Release of Financial
 Securities’ stipulates specific documentation requirements that must be implemented when accepting
 bank guarantees.

 ROLES AND RESPONSIBILITIES

 A The key Council stakeholders in ensuring the effective implementation of this policy and adherence
 to the related policy guidelines are:

 • The Financial Services Branch will have primary responsibility in ensuring that the specific
   requirements stipulated in the policy and related guidelines are adhered to as well as monitoring
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