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ACCC Advocating for Stronger Competition Framework

Thursday 1 March 2018


Competiton

In its opening statement to the Productivity Commission (PC) public hearing into ‘Competition in the Australian Financial System’, the Australian Competition and Consumer Commission (ACCC) discussed their role in helping to oversee competition in the financial sector.

When considering that role, the ACCC agreed with the PC’s need for competition and regulation when it comes to competition in banking.

“With our strengthened mandate from Government, we believe 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 unfettered by the limitations of regulatory regimes,” the ACCC said.

They believe their scope allows for them to cooperate with the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investment Commission (ASIC) and the Reserve Bank of Australia (RBA).
The regulator took the opportunity to address the developments concerning open banking and the Financial Services Unit (FSU). 

The focus of open banking is, primarily, on the consumer’s right to control data that is collected about them. The consumer can then direct their bank or financial institution to share that data with a third party.
Together with the FSU, established last year, the regulator said a residential mortgage price inquiry will be their first task.

“From July 2018 onwards, the FSU will commence its market studies work. The precise scope of that work is still being determined but could include assessing the impact of regulatory measures that affect the ability of smaller banks to compete against the majors, barriers to entry in financial services markets, and consumer switching.”

The ACCC argued that “International experience, especially in banking, has shown that giving consumers access to their data—known as the ‘right to data’—increases competition, as it gives consumers more scope to compare competing offers, make more informed choices, and more easily move their business.”

The ACCC is of the view that open banking will help improve competition and create a better consumer focus.
 
 “Whatever mechanism or process is ultimately adopted, the ACCC is firmly of the view that it is important for competition to be given greater significance in the regulatory decision-making process. A threshold question to resolve is which matters should be considered by the regulator with the role of championing competition,” the ACCC said.