In her keynote address to the AFR Banking Summit 2022, Australian Competition and Consumer Commission (ACCC) Chair Gina Cass-Gottlieb spoke about the ACCC's work in enforcing competition law in the financial services sector and highlighted the regulator's key financial services-related priorities. An overview of some of the key points is below.
Overarching priority
Ms Cass-Gottlieb made clear at the outset of her address that:
'Promoting effective competition, investigating allegations of anti-competitive conduct, and protecting the interests of consumers in the financial services sector are enduring priorities for the ACCC'.
Targeting anti-competitive conduct in payment services
Ms Cass-Gottlieb identified 'promoting competition and investigating allegations of anti-competitive conduct in the financial services sector, with a focus on payment services' as a key priority for the ACCC for 2022/23.
Least cost payments routing was highlighted as one area of focus. Ms Cass-Gottlieb pointed to the ACCC's recent court action against Mastercard (Mastercard Asia/Pacific Pte Ltd and Mastercard Asia/Pacific (Australia) Pty Ltd) in connection with (alleged) anti-competitive conduct as an example of the regulator's willingness to take enforcement action where needed.
Ms Cass-Gottlieb said that this action
'is but one aspect of the broader work we will be undertaking in accordance with our focus on compliance in the financial services sector. Those in the sector should therefore be on notice that we will not hesitate to take action in response to concerns raised about anti-competitive conduct in this important sector of Australia’s economy'.
Digital platforms payments was also flagged as an area of focus. Ms Cass-Gottlieb said that the ACCC’s digital platform services inquiry reports have identified various competition and consumer concerns in digital sectors such as search, social media, app marketplaces including in app payments, display advertising, search advertising and the ad tech supply chain.
Ms Cass-Gottlieb flagged that the ACCC’s fifth report, which is due to be delivered to government in September 2022, will include consideration of 'whether there is a need for a new regulatory framework to address the range of competition and consumer concerns identified in digital platform services markets to date, including in relation to payments in digital ecosystems'.
More broadly, Ms Cass-Gottlieb also flagged that in response to the rapidly evolving payments and services ecosystem, payments regulation is 'undergoing a comprehensive redesign' and that the ACCC stands ready to work with government to ensure any changes to the regulatory framework are fit for purpose. Ms Cass-Gottlieb said that:
'At the ACCC we are committed to promoting and protecting competition in this important sector, particularly in the face of these rapid developments in supply and demand, and working with the Government to ensure that the regulatory framework for payments is designed to facilitate dynamic and innovative markets and good consumer outcomes'.
The role of market inquiries in changing industry behaviour
Ms Cass-Gottlieb described market inquiries generally as 'an important tool for the ACCC' and a means of enabling the regulator to engage 'deeply on competition issues, work with industry and other regulators to identify solutions to emerging competition problems and focus on areas of potential market failure'.
Ms Cass-Gottlieb cited the ACCC’s 2019 inquiry into foreign currency conversion services as an example of the effectiveness of this 'tool' in changing industry practice. Ms Cass-Gottlieb said that at the time the ACCC conducted the inquiry, the regulator observed that many consumers purchased the equivalent of over AUD40 billion in foreign currency each year but that many could potentially get a better deal if they had more transparent pricing information to help them compare the options.
To address this, the ACCC's report included best practice guidance for suppliers, aimed at making it easier for consumers to seek out the cheapest option and to promote price competition between suppliers. Subsequent monitoring has demonstrated that the guidance has 'been a success' in changing industry practice, to the benefit of consumers.
Ms Cass-Gottlieb flagged that the ACCC is now 'considering ways to monitor prices and margins in the foreign currency industry to determine the impact of the best practice guidance'.
Disrupting scams
Ms Cass-Gottlieb identified the identification and disruption of scam activity as another area of focus for both the regulator and for the banking sector, noting so far this year Australians have already reported $200 million lost to scams, with the actual figure likely to be higher.
Ms Cass-Gottlieb said that investment scams have had the highest financial impact so far this year, accounting for almost $170 million of the $228 million lost. Ms Cass-Gottlieb identified ensuring culturally and linguistically diverse communities as a key challenge in this area for both banks and the regulator. She said that:
'Consumer organisations have told us that members of the CALD communities are struggling to obtain timely assistance from their bank when they encounter a scam, due largely to language barriers and difficulty navigating fraud reporting processes.
Ms Cass-Gottlieb observed that banks 'are in a unique position to identify fraud risks for vulnerable consumers and to invest in capability to mitigate these risks'.
Commenting briefly on cryptocurrency scams, Ms Cass-Gottlieb said that the ACCC has observed an uptick in the number of people losing money through cryptocurrency both as a form of investment scams, as well as a payment method for scams with more than $100 million reported lost to crypto investment scams so far this year.
Ms Cass-Gottlieb commented that:
'This is a challenging regulatory landscape due to how different legislation interacts. We are working closely with ASIC to ensure there are mechanisms in place that allow ASIC and the ACCC to take action under the Australian Consumer Law, or the ASIC Act and Corporations Act'.
Ms Cass-Gottlieb pointed to the proceedings commenced by the ACCC against Meta over publication of 'scam advertisements promoting cryptocurrency and other money-making schemes' (which the ACCC alleges amounted to false, misleading or deceptive conduct) as an example of this.
Ms Gottlieb also emphasised the importance of collaboration – collaboration between regulators, and collaboration between industry and regulators – in protecting Australians from falling victims to scams.
In doing so, Ms Cass-Gottlieb identified 'six things' banks could do to 'make a difference' in protecting Australians from scammers, namely: 1) preventing scammers from opening accounts; 2) ensuring 'rigorous identity verification processes' are in place; 3) ensuring systems 'can flag and block suspicious transactions'; 4) warning customers when suspicious transactions are identified; 5) introducing confirmation of payees to reduce the losses to scams through payment redirection scams (ie Business Email Compromise scams); and 6) staying 'on top of scam trends' and educating employees, as the last line of protection' about scams.
Compliance with Consumer Data Right (CDR) obligations
Ms Cass-Gottlieb also spoke about the ACCC's role in implementing the consumer data right (CDR) and touched briefly on some of the benefits already being realised by industry. In doing so, she acknowledged the 'significant effort' industry has made to be able to comply with their CDR obligations, and as well as the investment made by accredited data recipients.
Ms Cass-Gottlieb said that the ACCC expects industry to focus on ensuring they comply with their CDR obligations
'…while we appreciate how well the banking sector has taken up the CDR, we also take CDR compliance very seriously. To protect the integrity of the CDR we will consider enforcement action against data holders who are not meeting their obligations. We understand CDR obligations are sometimes complex, but the law now provides a data right for consumers and data holders need to meet their legal requirements'.
Industry should expect increased engagement with the regulator on the priorities outlined
Ms Cass-Gottlieb concluded her address by stating that the ACCC is:
'committed to expand and increase our engagement with the sector [the financial services sector] in the coming year. Our priorities in enforcement, payment services and digital platforms, market studies, scam disruption and delivering on the CDR will mean we are engaging with the banking sector more than ever before. We look forward to further cooperation in the manner of best practice compliance and scam disruption with all of you in the banking and finance sector as well as our fellow regulators, and Treasury to meet and tackle the many emerging challenges ahead'.
[Sources: ACCC Chair Gina Cass-Gottlieb Keynote Address to the AFR Banking Summit 2022, 'ACCC's priorities and approach to regulating the financial services sector' 31/05/2022; ACCC media release 31/05/2022]
