Yet another inquiry has been announced into mortgage pricing as the ACCC is tasked to examine the banks failure to pass on in full official interest rate cuts engineered by the central bank. The ACCC’s preliminary report is due by 30 March next year, six months before the final report.
Beyond the crocodile tears, there are important questions here, because as we have highlighted, loyalty is not rewarded as the banks cut rates to attract new customers. In addition, deposit margin compression has reach a floor, and funding costs are under pressure. But nothing has fundamentally changed from recent ACCC and Productivity Commission reports. Yet, having another investigation takes pressure off The Treasurer, conveniently.
Via The Guardian. The treasurer, Josh Frydenberg, has asked the competition watchdog to examine why many mortgage holders are being charged rates well above the cash rate record low of 0.75%.
The higher rates have prompted allegations of price gouging by the banks – Commonwealth Bank,
Westpac, ANZ and National Australia Bank – which have previously cited
funding costs as a reason why not all reductions could be passed on.
“We need information about the cost of the funds of the banks and …
why they’re not passing on these rate cuts in full,” Frydenberg told
ABC television on Monday.
The inquiry, which will also include smaller institutions, comes
after an earlier royal commission into misconduct in the banking sector
uncovered predatory practices and dented market confidence.
But Frydenberg shrugged off suggestions that the new inquiry by the
Australian Competition and Consumer Commission would further affect
confidence in Australia’s banks.
“I actually did call the CEOs of the big four banks yesterday and
told them that this could actually help clear the air,” he said. “But at
the same time, you know, they’re defending their patch and will
continue to do.”
The treasurer said the banks need to explain how they balance the competing needs of shareholders and customers.
The official cash rate is at a record low of 0.75% after the Reserve
Bank of Australia cut interest rates three times this year. But the big
four banks on average passed on only 75% of the total reductions to
their customers.
“There are a number of smaller lenders that have actually wasted no
time in passing on these rate cuts on in full,” Frydenberg said.
“If the big four banks had passed on these 75 basis point rate cuts,
then somebody with a $400,000 mortgage would be more than $500 a year
better off in lower interest payments.”
The ACCC’s preliminary report is due by 30 March next year, six months before the final report.
The ACCC proposes to impose conditions on the Australian Banking
Association’s (ABA) Banking Code of Practice to ensure the revised Code
will benefit low-income consumers and drought-affected farmers.
The ABA, on behalf of its 23 members including the major banks, has
sought authorisation to amend its Banking Code in line with
recommendations of the Royal Commission into Misconduct in the Banking,
Superannuation and Financial Services Industry (Hayne Royal Commission).
The proposed amendments aim to improve basic bank accounts and low or
no-fee accounts by prohibiting informal overdrafts unless requested by
the customer, and dishonour fees. The ABA is also proposing that certain
types of basic bank accounts have no minimum deposits, free direct
debit facilities, access to a debit card at no extra cost and free
unlimited domestic transactions.
In addition, the ABA’s changes would prevent default interest being charged on agricultural loans in drought-affected areas.
After considering the ABA’s proposal, the ACCC believes that additional conditions are required to strengthen these changes.
“The proposed changes to the Code should result in public benefits,
by giving customers on low incomes better access to affordable banking,
and to address a source of significant harm to farmers experiencing
drought,” ACCC Deputy Chair Delia Rickard said.
“While the ACCC strongly supports these objectives, we are proposing
to place extra conditions on ABA members to ensure the changes
effectively address the Royal Commission’s recommendations, and in turn
actually deliver these public benefits.”
For example, under the ABA’s proposal, basic bank accounts could
still be overdrawn without the customer’s agreement in some
circumstances, and banks could continue to charge interest, in some
cases at rates approaching 20 per cent, on overdrawn amounts.
“This could lead to low income customers getting into debt from
overdrafts they did not agree to, which is exactly the kind of problem
the Hayne Royal Commission sought to address,” Ms Rickard said.
The proposed conditions of authorisation would not allow interest to
be charged in these cases, or would require any such interest charges to
be repaid to the customer.
The ACCC also shares consumer groups’ concerns that the ABA’s
proposed changes would not require banks to proactively identify
existing customers who would be eligible for the accounts, or even to
continue to offer a basic bank account at all.
To address this, the ACCC’s proposed conditions would require banks
to proactively identify eligible customers, including through data
analysis; inform these customers of their eligibility, and for the ABA
to report to the ACCC on measures taken to offer them fee-free bank
accounts, and report how many customers have taken them up.
The ACCC will also require members of the ABA who currently offer a
basic banking product to continue to do so for the period of
authorisation.
Feedback is invited on these issues and the proposed conditions by 14
October 2019. The ACCC’s final determination is due in November 2019.
The draft determination and more information about the application for authorisation is available at The Australian Banking Association.
Australia’s customer owned
banking sector welcomes reports that the Australian Competition and Consumer
Commission (ACCC) is requesting to conduct an inquiry into the banking
industry’s competitiveness.
Customer Owned Banking Association CEO Michael Lawrence
says the request from the ACCC and the comments from Tim Wilson MP were
encouraging for credit unions, building societies and mutual banks who have
been leading the charge for a more competitive retail banking market.
“The enduring solution to concerns about the banking
market is action to promote competition.
“We don’t have sustainable banking competition at
the moment. A lack of competition can contribute to inappropriate conduct
by firms, and insufficient choice, limited access and poor-quality products for
consumers.
“We strongly support the ACCC’s calls for an
inquiry to examine the banking industry’s competitiveness. It’s encouraging to
see that the ACCC and Tim Wilson MP share our sector’s concerns about
competition and what an uncompetitive banking market means for consumers.
“Last year’s Productivity Commission’s report on
competition in banking sent strong messages to regulators and policymakers that
regulation is hurting competition and consumers are paying the price.
“The regulatory framework over time has
entrenched the dominant position of the largest banks.
“The PC report shone a light on a problem that is not
well enough recognised – that more and more regulation can be harmful to
consumers because it weakens competition.
“The Productivity Commission found that competition
drives innovation and overall value for customers.
“The Financial Services Royal Commission
looked into misconduct, now is the time to look into competition.”
Australian
consumers are paying too much for foreign currency conversion (FX)
services because of confusing pricing and a lack of robust competition, a
new ACCC report has found.
The final report of the ACCC’s Foreign Currency Conversion Services Inquiry
highlights important competition and consumer issues affecting
individuals and small businesses who use international money transfers
(IMTs), foreign cash, travel cards, and credit cards or debit cards for
transactions in foreign currencies.
The ACCC found that it can be challenging for consumers to shop
around and make informed decisions about FX services. As a result, many
consumers continue to use the big four banks for FX services despite the
availability of much cheaper alternatives.
It is difficult for consumers to compare prices because some
suppliers do not disclose their total price up front. In addition,
consumers pay unexpected fees for some services. Finally, complex prices
can deter consumers from shopping around because of the time and effort
required to do so.
During 2017-18, individual consumers who used the big four banks to
send IMTs in US dollars and British pounds could have collectively saved
about AUD150 million if they had instead used a lower priced IMT
supplier.
“Shopping around could save Australian consumers hundreds of millions of dollars each year,” ACCC Chair Rod Sims said.
“Consumers and small businesses tend to default to their usual bank
to send money overseas, but this may not be the cheapest option. This is
another example where consumers may end up paying more for their
loyalty.”
Guidance for consumers using FX services
The ACCC has released a guide to
help consumers shop around. For example, the guide gives tips on
sending money overseas and avoiding fees when making overseas purchases
online.
“The guide will help consumers to shop around, carefully select where
and how they pay for their purchases and to identify fees so they can
get the best deal,” Mr Sims said.
“For example, the guide explains how foreign exchange services with low or no fees are not always the best value for money.”
“We have also tried to clear up a few misconceptions, such as the
assumption that paying in Australian dollars when shopping overseas is
always best, when that is not the case.”
The final report warns that travellers can pay a high price for
leaving their purchase of foreign cash to the last minute and buying at
the airport.
Consumers should also consider whether their existing credit or debit
card may be cheaper than using foreign cash or a travel money card for
overseas purchases. Some credit and debit providers offer cards with no
international transaction fees which can be a much cheaper option than
many other products.
Consumers should be aware that some commercial comparison sites may
not be independent and that suppliers may pay for their services to be
promoted by these sites. There are, however, two government-funded
comparison websites for international money transfers (IMTs): www.sendmoneypacific.org and www.saverasia.com, which compare prices of IMT services available to a number of South-East Asian and Pacific Island countries.
Savings to be made
The ACCC inquiry found:
Foreign cash is more expensive at airport locations than at other
locations. When buying USD200 in February 2019, consumers could have
saved AUD40 by purchasing from the cheapest supplier at a non-airport
location, compared with the most expensive supplier at the airport.
Consumers and small businesses who used the most expensive bank to
transfer USD7000 would have paid more than AUD500 more than if they had
used the cheapest supplier.
If customers of the big four banks used a debit or credit card
without international transaction fees instead of a travel money card,
they could save up to AUD13 on a USD200 purchase.
Customers of the big four banks could save up to AUD5 on a USD200
purchase if they used a ‘regular’ debit or credit card instead of a
travel money card.
Guidance for businesses
The report includes best practice guidance for businesses supplying
FX services. It explains how they should disclose prices to consumers.
The guidance focuses on ensuring that businesses clearly disclose the
full price of an FX service to consumers upfront.
“We consider businesses who ignore this best practice guidance may be
at risk of breaching the Australian Consumer Law,” Mr Sims said.
“The ACCC will take action against businesses who do not make appropriate disclosures to consumers.”
New entrants providing lower prices, more advanced services
The ACCC has found that recent competition from newer entrants is
delivering better outcomes for consumers making use of IMTs, including
through lower prices and more advanced services.
These new entrants often rely on obtaining services from banks, their
vertically integrated competitors, to provide IMTs to their customers.
However, the inquiry found that some non-bank IMT suppliers had been
denied access to bank services, such as bank accounts.
“Banks need to comply with Australia’s anti-money laundering and
counter terrorism financing laws, and this is one reason banks have
given for withdrawing banking services to IMT providers,” Mr Sims said.
“The withdrawal of banking services from non-bank IMT suppliers
represents a significant threat to competition that could ultimately
result in less choice and higher prices for consumers.”
To address this issue, the ACCC recommends development of a scheme to
facilitate continued and efficient access to banking services by
non-bank IMT suppliers. This would include addressing the due diligence
requirements of the banks, including in relation to anti-money
laundering and counterterrorism financing requirements.
This scheme should be operational by the end of 2020.
Background
The inquiry was preceded by:
findings by the World Bank
in June 2018 that the cost of sending money overseas from Australia was
approximately 11 per cent higher than the G20 average, 13 per cent
higher than the UK and almost 40 per cent higher than the US
the Productivity Commission’s Report on Competition in the Australian Financial System
which recommended that the ACCC, in consultation with ASIC, investigate
what additional disclosure methods could be used to improve consumer
understanding and comparison of fees for foreign transactions.
On 2 October 2018,
the Treasurer approved the ACCC holding an inquiry into the supply of
FX services in Australia. On the same day, the ACCC released an issues
paper for the inquiry. In response, the ACCC received 63 written
submissions from a mix of consumers, FX services suppliers, small
businesses and other stakeholders.
The final report focuses its competition analysis primarily on IMTs. IMTs are significant for a number of reasons including:
prices in Australia are high by global standards and IMTs are a
significant outlay for Australians with an estimated AUD21 billion in
personal IMTs sent from Australia each year
IMTs are regularly used by groups of potentially vulnerable and disadvantaged consumers such as migrants and temporary workers
the average transaction size for IMTs is much larger than the other services considered in the inquiry.
The inquiry is the second inquiry undertaken by the ACCC’s Financial
Services Competition Branch (FSCB). The FSCB proactively monitors and
promotes competition in Australia’s financial services sector by
assessing competition issues and undertaking market studies.
The annual average retail petrol price in 2018–19 was the highest in
real terms (i.e. adjusted for inflation) in four years according to the
ACCC’s latest report on the Australian petroleum market for June quarter 2019.
The report shows that in the five largest cities, Sydney, Melbourne,
Brisbane, Adelaide and Perth, the average annual petrol price in 2018–19
was 141.2 cents per litre (cpl), nearly 7.0 cpl higher than last year.
In nominal terms (i.e. with prices not adjusted for inflation) it was
the highest annual average price in five years.
Annual average retail petrol prices in the five largest cities in nominal and real terms: 2000–01 to 2018–19
“The most significant contributor to this increase was the
depreciation over the year in the AUD-USD exchange rate, which decreased
by USD 0.06 to USD 0.72,” said ACCC Chair Rod Sims.
“This was the lowest annual average AUD-USD exchange rate in the last
15 years. The AUD–USD exchange rate is a significant determinant of
Australia’s retail petrol prices because international refined petrol is
bought and sold in US dollars in global markets.”
A significant development in the petrol industry in the first half of
2019 has been the change in price setter at both Coles Express, to Viva
Energy, and Woolworths, to EG Group, retail sites.
The report found that compared with market average prices, Coles
Express prices were lower in most capital cities after Viva Energy began
setting prices. However, they remained above the market average price
in all eight capital cities. At Woolworths, prices were higher in most
capital cities after EG Group took over the retail sites, although in
the majority of cities, prices were still below the market average
price.
“The ACCC will monitor prices at these retail sites very closely in future,” Mr Sims said.
Mr Sims said it was important for motorists to shop around for cheap
fuel by using the available fuel price websites and apps. For those
motorists in the five largest cities, they can also use information
about petrol price cycles on the ACCC website to time their purchases.
Retail petrol prices in the three smaller capital cities; Canberra,
Hobart and Darwin, are typically higher than prices in the five largest
cities. However, the report noted that, in the first half of 2019, there
were periods when prices in Darwin and Canberra were below prices in
the five largest cities.
Monthly average retail prices in Darwin were lower than in the five
largest cities between February and May 2019, and monthly average retail
prices in Canberra were lower than in the five largest cities in both
April and May 2019.
“This was the first time monthly average prices in Canberra were
below the average price in the five largest cities since April 2012,” Mr
Sims said. “The reduction in prices in the Darwin and Canberra is good
news for motorists in those locations.”
The lower prices in Canberra may have been influenced by the
possibility of greater regulation of the petroleum industry arising from
the current ACT Legislative Assembly petrol inquiry. The situation in
Canberra is similar to that in Darwin in 2015, when the decrease in
petrol prices coincided with increased local scrutiny of petrol prices
by the NT Government.
The report noted that in the June quarter 2019, average retail petrol
prices across the five largest cities were 145.3 cpl, an increase of
15.0 cpl from the March quarter 2019. The principal driver of the
increase was rising international crude oil and refined petrol prices in
the quarter. These continue to be influenced by the agreements made
since late-2016 by the Organisation of Petroleum Exporting Countries
(OPEC) cartel, and some other crude oil producing countries, including
Russia, to cut production.
Other petrol fast facts:
Brisbane petrol prices were higher than the other large Australian cities.
The city–country petrol price differential decreased in the quarter to 1.5 cpl.
Analysis of NSW’s Coffs Harbour petrol prices shows there are a range of prices available to motorists if they shop around.
Diesel and automotive LPG prices in the five largest cities both increased.
The ACCC says that Australians are set to lose a record amount to scams in 2019, with projections from losses reported to Scamwatch and other government agencies so far expected to exceed $532 million by the end of the year, surpassing half a billion dollars for the first time.
This year’s National Scams Awareness Week
(12-16 August) theme is “too smart to be scammed?” and the ACCC, along
with over 100 campaign partners from government and industry, is urging
consumers to test their scams knowledge and refresh their scam
protection and detection skills.
“Many people are confident they would never fall for a scam but often
it’s this sense of confidence that scammers target,” ACCC Deputy Chair
Delia Rickard said.
“People need to update their idea of what a scam is so that we are
less vulnerable. Scammers are professional businesses dedicated to
ripping us off. They have call centres with convincing scripts, staff
training programs, and corporate performance indicators their
‘employees’ need to meet.”
Investment scams are one of the most sophisticated and convincing
scams and continue to have the highest losses. Nearly half of all
investment scams reported this year resulted in a financial loss.
These scams are prominent on social media, with ‘Facebook lottery’
scams, the ‘Loom’ pyramid scheme, and cryptocurrency scams particularly
common.
Cryptocurrency investment scams have seen record losses, with reports
to the ACCC alone of $14.76 million between January and July 2019. Many
use social media platforms, fake celebrity endorsements or fake online
trading platforms that are made to look legitimate.
Protection advice
“Our advice is to be wary of ads you see on the internet. Don’t be
persuaded by celebrity endorsements or ‘not to be missed’ opportunities.
You never know for certain who you’re dealing with or whether they’re
credible,” Ms Rickard said.
“If you think you’re speaking to a friend on social media, call them,
or find another way to contact them before acting on any advice that
might result in you giving away your personal details or money.”
Scamwatch also suggests that people check ASIC’s list of companies you should not deal with.
If the company that contacted you is on the list – do not deal with
them, and even if they are not listed, continue researching and speak to
a financial advisor before investing.
Be vigilant on social media, when shopping online and when answering
the phone, and never give anyone who has contacted you out of the blue
your personal details, banking details or remote access to your
computer, no matter who they say they are. It’s best to assume scammers
are everywhere, waiting for you to let your guard down.
“Remember, anyone could fall victim and no one is ‘too smart to be
scammed’. Always ask yourself, ‘could this be a scam?’ and if you’re
ever in doubt, decline the contact or hang up the phone – it’s often the
safest option,” Ms Rickard said.
The ACCC has produced a series of videos with tips and tricks on how to spot a scam, and to test people’s awareness of scams. The full series is also available on YouTube.
Australians are losing more money to NBN scams, with reported losses in 2019 already higher than the total of last year’s losses, according to the ACCC.
Consumers lost an average of more than $110,000 each month between
January and May this year, compared with around $38,500 in monthly
average losses throughout 2018 – an increase of nearly 300 per cent.
“People aged over 65 are particularly vulnerable, making the most
reports and losing more than $330,000 this year. That’s more than 60 per
cent of the current losses,” ACCC Acting Chair Delia Rickard said.
“Scammers are increasingly using trusted brands like ‘NBN’ to trick
unsuspecting consumers into parting with their money or personal
information.”
Common types of NBN scams include:
Someone pretending to be from NBN Co or an internet provider calls a
victim and claims there is a problem with their phone or internet
connection, which requires remote access to fix. The scammer can then
install malware or steal valuable personal information, including
banking details.
Scammers pretending to be the NBN attempting to sell NBN services, often at a discount, or equipment to you over the phone.
Scammers may also call or visit people at their homes to sign them
up to the NBN, get them a better deal or test the speed of their
connection. They may ask people to provide personal details such as
their name, address, date of birth, and Medicare number or ask for
payment through gift cards.
Scammers calling you during a blackout offering you the ability to stay connected during a blackout for an extra fee.
It is important to remember NBN Co is a wholesale-only company and does not sell services directly to consumers.
“We will never make unsolicited calls or door knock to sell broadband
services to the public. People need to contact their preferred phone
and internet service provider to make the switch,” NBN Co Chief Security
Officer Darren Kane said.
“We will never request remote access to a resident’s computer and we
will never make unsolicited requests for payment or financial
information.”
“If someone claiming to work ‘for the NBN’ tries to sell you an
internet or phone service and you are unsure, ask for their details,
hang up, and call your service provider to check if they’re legitimate.
Do a Google search or check the phone book to get your service
provider’s number, don’t use contact details provided by the sales
person,” Ms Rickard said.
“Never give an unsolicited caller remote access to your computer, and
never give out your personal, credit card or online account details to
anyone you don’t know – in person or over the phone – unless you made
the contact.”
“It’s also important to know that NBN does not make automated calls
to tell you that you will be disconnected. If you get a call like this
just hang up.”
“If you think a scammer has gained access to your personal
information, such as bank account details, contact your financial
institution immediately.”
The ACCC has established a Financial Services Competition Branch, which it says will provide support for the Commonwealth Director of Public Prosecutions’ prosecution of ANZ, Citigroup, Deutsche Bank and six senior officers, via InvestorDaily.
The unit, enabled by an allocation from the government’s mid-year
budget, falls under the ACCC’s new Compliance and Enforcement Policy and
includes a permanent competition investigation team.
The competition regulator expects its team to complete a number of investigations that could result in court proceedings.
The announcement made by ACCC chair Rod Sims during his address to
the Committee for Economic Development Australia comes on the back of
AMP executives facing potential criminal charges, in a case against ASIC
over charging fees for no service.
“In commenting on regulators, the final report of the financial
services royal commission focused on issues that were of primary concern
to ASIC and APRA,” Mr Sims said.
“However, an underlying theme of the royal commission final report
was that competition is not vigorous among the major banks or in some
parts of the financial sector.”
The watchdog is also writing rules for the Consumer Data Right
system, known as ‘open banking’, which will determine how banks must
operate under the scheme.
The ACCC’s work will also focus on foreign exchange fees remaining high, Mr Sims added.
The ACCC said the finance competition investigation team will
complement a market studies unit that focuses on the financial sector,
which has been in place for a year.
The opaque, discretionary pricing of residential mortgages by banks makes it difficult and time consuming for borrowers to shop around and stifles price competition, a report by the ACCC has found.
The ACCC’s Residential Mortgage Price Inquiry monitored the prices
charged by the five banks affected by the government’s Major Bank Levy
between 9 May 2017 and 30 June 2018.
The ACCC’s final report
found the unnecessarily high search costs or effort required by
borrowers to find better prices reduces their willingness to shop
around, but that many borrowers who negotiate with their bank can get a
much better price.
“Pricing for mortgages is opaque and the big four banks have a lot of
discretion. The banks profit from this and it is against their
interests to make pricing transparent,” ACCC Chair Rod Sims said.
“Borrowers may not be aware they can negotiate with their lender on
price, both before and, particularly, after they have established their
mortgage.”
As at 30 June 2018, an existing borrower with an average-sized
mortgage could initially save up to $850 a year in interest if they
negotiated to pay the same interest rate as the average new borrower at
the five banks under review. For many borrowers the gain will be much
larger.
It appears that media attention on banks from the Banking Royal
Commission, the Productivity Commission’s Inquiry into competition in
the Australian financial system and the ACCC’s inquiry prompted some
borrowers to approach their lender for a better rate.
The ACCC reports that about 11 per cent of borrowers with variable
rate mortgages had the price of their current residential mortgage
reduced by one of the five banks under review in the year to 30 June
2018.
“I encourage more people to ask their lender whether they are getting
the lowest possible interest rates for their residential mortgage and,
as they do so, be ready to threaten to switch to another lender,” Mr
Sims said.
“I am afraid that the threat of switching banks will often be necessary to achieve a competitive mortgage rate.”
When directing the ACCC to conduct this inquiry, the Treasurer
requested the ACCC to report whether it found any evidence of the five
banks passing on the costs associated with the Major Bank Levy to
residential mortgage borrowers.
“The ACCC found no evidence that the five banks changed prices
specifically to recover the cost of the Major Bank Levy, whether in part
or in full, during the price monitoring period,” Mr Sims said.
The ACCC did find that measures announced by APRA in March 2017 to
limit new interest-only residential mortgage lending created an
opportunity for banks to synchronise increases to headline variable
interest rates for interest-only mortgages.
“We were not surprised banks seized the opportunity to increase
prices for interest-only loans. These price rises were enabled by the
oligopoly market structure in which the big four banks collectively have
a market share of about 80 per cent,” Mr Sims said.
ANZ was the first bank to announce increases to these interest-only
rates in June 2017. It did so safe in the knowledge that its move would
put the other banks at risk of breaching the APRA limits.
The other four banks, therefore, announced similar changes in the
same month. Together, the big four banks estimated revenue gains of over
$1.1 billion for their 2018 financial year, primarily as a result of
these rate increases.
“We consider that ANZ increased its rates, clear in its belief that,
given the APRA limits, the other big four banks would follow its lead,
and this expectation proved correct,” Mr Sims said.
The ACCC calculated that the rate increases by the five banks would
have added, in the first year, about $1300 in interest charged to the
average-sized owner-occupier interest-only standard variable mortgage.
“Such is the oligopolistic nature of banking that the banks all took
the opportunity to increase rates on both new and existing interest-only
mortgages, despite APRA’s measures only applying to new lending,” Mr
Sims said.
The ACCC also compared the approach to pricing of a sample of seven
banks that were not subject to the Inquiry. Three of these banks were
particularly focussed on competing on price, and therefore have lower
rates. Some of the banks in our sample rely heavily on brokers and
aggregators to gain market share. The ACCC notes that these banks, and
other lenders in a similar position, are likely to be more vulnerable to
future regulatory changes that affect the use of brokers as a
distribution channel.
In this report the ACCC notes that the new Consumer Data Right will,
among other things make it much easier for consumers to compare
available interest rates.
“The ACCC looks, in particular, to the Consumer Data Right to empower consumers in their dealings with banks,” Mr Sims said.
On 9 May 2017 the Treasurer, the Hon. Scott Morrison MP, issued a
direction to the ACCC to inquire into prices charged or proposed to be
charged by Authorised Deposit-taking Institutions affected by the Major
Bank Levy in relation to the provision of residential mortgage products
in the banking industry in Australia. The Major Bank Levy came into
effect from 1 July 2017.
The five banks affected by the levy are Australia and New Zealand
Banking Group Limited (ANZ), Commonwealth Bank of Australia, Macquarie
Bank Limited, National Australia Bank Limited, and Westpac Banking
Corporation.
The ACCC used its compulsory information gathering powers to obtain
documents and data from the five banks on their pricing of residential
mortgage products. The ACCC supplemented its analysis of the documents
and data supplied by the five banks with data from the Reserve Bank of
Australia (RBA), Australian Prudential Regulation Authority (APRA) and
the Australian Bureau of Statistics (ABS).
This Inquiry was the first task of the ACCC’s Financial Services Unit
(FSU), which was formed as a permanent unit during 2017 following a
commitment of continuing funding by the Australian Government in the
2017-18 Budget. Alongside the ACCC’s role in promoting competition in
financial services through its enforcement, infrastructure regulation,
open banking, and mergers and adjudication work, the FSU will monitor
and promote competition in Australia’s financial services sector by
assessing competition issues, undertaking market studies, and reporting
regularly on emerging issues and trends in the sector.
The FSU is currently examining the pricing of foreign currency
conversion services in Australia to evaluate whether there are
impediments to effective price competition in the sector. An inquiry
report is to be delivered to the Treasurer by 31 May 2019.
