Focus on three issues
The ACCC's statement commented on the following three issues:
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Competition advocacy and the ACCC’s role in financial services.
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The ACCC’s Financial Services Unit.
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Embedding greater transparency in decision-making and a commitment to competition.
The ACCC noted that other findings and recommendations in the PC draft report would be dealt with in the ACCC written submission.
Competition advocacy and the ACCC’s role in financial services
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ACCC is 'well placed' to be the lead regulator: The ACCC expressed support for the PC draft finding that there is a need for greater competition advocacy in the financial system and stated that the ACCC is 'well placed to bring its singular focus on competition to important regulatory decisions in the financial sector. Our approach seeks to be driven by market dynamics and be unfettered by the limitations of regulatory regimes'.
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Collaboration with APRA, ASIC and the RBA will help ensure 'nothing falls through the cracks': The statement added that that the ACCC sees considerable scope for it to work more closely with other regulators (APRA, ASIC and the RBA) in considering and providing advice on the impact of key measures they take or in helping to inform their decision making in relation to competition issues. Such an approach would ensure that nothing ‘falls through the cracks’.
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ACCC already the lead regulator on Open Banking: The statement comments that since the release of the PC's draft report, the Treasurer announced that the government has committed to introducing open banking using a dual-regulator model with the ACCC as the lead regulator, 'strongly supported by' the Office of the Australian Information Commissioner. The statement adds that the ACCC 'welcomes this development and is looking forward to working towards "open banking" for the benefit of competition and consumers.
The ACCC’s Financial Services Unit
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Many of the responsibilities proposed by the PC for the competition champion are aligned with the Financial Service Unit's (FSU’s) existing mandate: The statement comments that Residential Mortgage Price Inquiry is the first task of the FSU, and that from July the FSU will commence its market studies work. The statement notes that the scope of the work is still being determined but may include assessing the impact of regulatory measures which affect the ability of smaller banks to compete against the majors, barriers to entry in financial services markets and consumer switching. The statement adds that the FSU's capacity is larger than notional staffing numbers suggest (12 staff) and it has scope to concurrently undertake a mix of market studies and investigations (among other matters) as required.
Embedding greater transparency in decision-making and a commitment to competition
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The ACCC states that it supports increased transparency in regulatory decision making impacting the financial system. The statement comments that ideally, new or amended regulation in this space would be developed in consultation with, or input from, the competition regulator. This would enhance the consultation process and allow the merits of proposed regulation to be debated more fully.
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The ACCC stands 'ready to work in this way with APRA, the RBA, ASIC and the Council of Financial Regulators (CFR). The ACCC stated that it is also keen to work with APRA, the RBA and ASIC should they require specialist competition expertise when seeking to balance their respective statutory competition objectives with their other statutory objectives such as financial system stability.
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The 'ACCC is firmly of the view that it is important for competition to be given greater significance in the regulatory decision-making process' regardless of the model eventually decided on. 'A threshold question' to resolve is which matters should be considered by the regulator with the role of championing competition, the ACCC noted. 'In our view, priority should be given to measures likely to have a significant impact on the competitive process in the market and measures which prevent new competitors from entering a market or otherwise increase barriers to entry'.
[Source: Australian Competition and Consumer Commission: Opening statement at the PC public hearing into Competition in the Australian Financial System 28/02/2018]
Credit Unions and regional banks are reportedly supportive the ACCC becoming the 'competition champion' for the financial sector: The AFR writes that credit unions and regional banks are supportive of an increased role for the ACCC in the financial sector as suggested in the PC draft report. The article adds that the CEO of the Customer Owned Banking Association (COBA) Michael Lawrence has expressed support for the idea and in addition, has suggested that APRA's mandate should be amended to make competition a 'secondary objective' behind financial safety and stability, in line with the UK. The report adds that CBA and NAB have said that they supported 'many of the PC's recommendations' including stronger duties on mortgage brokers, but is not specific as to whether they have expressed support for an increased role for the ACCC.
[Source: [registration required] The AFR 01/03/2018]
ASIC Chair's comments on ASIC's approach to competition and the need for a 'proactive mandate': Commenting on ASIC's current role in addressing competition problems in the context of the financial system, ASIC Chair, James Shipton has told the Senate Economics Legislation Committee that ASIC considers competition issues in the context of taking regulatory action where necessary. Mr Shipton said that 'ASIC’s perspective on competition is to identify where consumer harm and poor conduct result from where competition is not operating effectively' and to respond accordingly eg ASIC's work in relation to add-on insurance sold through car yards. Mr Shipton added that for the regulator to 'continue this approach, it is important ASIC has a proactive mandate to consider competition issues when making regulatory decisions'.
[Source: Senate Economics Legislation Committee: Opening statement by ASIC Chair, James Shipton]
