The ACCC's new financial services unit will look at competition in the mortgage sector
The ACCC's chairman Rod Sims told MPA that the regulator's new financial services unit will look at competition in the mortgage sector.
"When you’re dealing with a product of fundamental importance to consumers … yes, you’ve got to look at that sector, it’s too important to the key consumer interaction with the financial sector not to look at it," he said Tuesday (20 February) following a speech on the regulator's priorities for the year at the Committee for Economic Development of Australia.
One of the areas that the new financial services unit could examine might be bank-owned aggregators.
The Productivity Commission flagged ownership structures of aggregators in its draft report on competition in the Australian financial system, saying: "The ownership of aggregators by lenders exacerbates potential conflicts of interest for brokers and carries the obvious risk that consumers have an illusion of choice rather than genuine choice in the market."
The ACCC will further consider many of the issues identified in the PC's draft report.
“Is there a conflict of interest? Well, of course there is. There has to be," Sims said.
"I mean, why are they owning it? I think there is a conflict of interest. The question is, how bad is it, and what do you do about it? But vertical integration, in theory, in any industry, is so that you can have some influence in other parts of the value chain. I mean they own it as a source of sending customers to their product.”
Sims said the financial services unit has a big agenda, but this is the "type of issue we'll be looking at".
The financial services unit in general will be tasked with examining anticompetitive conduct, as well as proactively identifying competition issues in the sector and conducting market studies.
Back in June 2017, the banks indicated that rate increases were primarily due to APRA’s regulatory requirements, but once under further scrutiny they admitted that other factors contributed to the decision, including profitability.
In December, the ACCC was called on by the House of Representatives Standing Committee on Economics to examine the banks’ decisions to increase rates for existing customers despite APRA’s speed limit only targeting new borrowers.
“It will be a very interesting report. It will be something that you’ll all be interested in. ... We’ve got to bring that together, we’ve got to present that to the Treasurer and then we’ve got to make it public," Sims said.
