ACCC to release mortgage report and investigate PC findings

Speaking at the Committee for Economic Development of Australia (CEDA) conference in Sydney on Tuesday, ACCC chairman Rod Sims provided an overview of the regulator’s priorities for 2018.

“In the 2017/18 Budget, the government gave us additional resources to set up a dedicated Financial Services Unit,” Mr Sims said.

“In addition to examining anti-competitive conduct, the FSU will proactively identify competition issues in the sector and conduct market studies.

“Importantly, the ACCC is due to release its interim report into residential mortgage pricing shortly. As directed by the Treasurer, a key focus will be on transparency, particularly how the major banks balance the interests of consumers and shareholders in making their interest rate decisions.”

Mr Sims said that the final report will be released after June 2018, following which the ACCC will transition to its market studies work, focusing on general competition issues.

“As was always envisaged, the PC’s draft report has identified many issues that we will consider further,” the chairman added.

In December, a parliamentary committee recommended that the ACCC, which had already been tasked with looking into the impact of the bank levy on mortgage pricing, also investigate the June 2017 rate hikes of the big four banks.

The third report from the House of Representatives Standing Committee on Economics recommended that the ACCC analyse the banks’ decisions to increase interest rates on existing borrowers despite APRA’s measure only targeting new borrowers.

“Further, the ACCC should consider whether the banks’ public statements adequately distinguish between new and existing borrowers,” the committee said.

“The ACCC should consider whether the media statements suggest rates on existing interest-only mortgages rose as a direct consequence of APRA’s regulatory requirement. It will be important that the ACCC conduct granular analysis of the financial modelling of the banks.”

The committee said that the ACCC will need to understand the true financial impact on the banks of APRA’s regulatory changes and assess that impact against the public statements of the banks.

[Related: New reforms see ACCC target major bank mortgages]