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Rod Sims’ term as the chair of the Australian Competition and Consumer Commission (ACCC) has been extended until 1 August 2022, which would make him the longest-serving chairman of the commission should he complete his term.
Under Mr Sims’ leadership, the government said that the competition watchdog obtained nearly $170 million in penalties for competition and consumer law contraventions in the 2017–18 financial year, including the highest ever penalty imposed for competition breaches in Australia ($46 million) from Japanese company Yazaki Corporation.
The government said that his reappointment would “ensure continued stability and strong leadership of the commission”, noting that there are important inquiries underway including on residential mortgage products in Australia.
After monitoring prices charged by Commonwealth Bank, ANZ, National Australia Bank, Westpac and Macquarie Bank, the ACCC’s residential mortgage price inquiry earlier this year found “less than vigorous price competition”, particularly between the big four banks, with Mr Sims accusing the banks of maintaining a pricing structure that favours stability ahead of competition.
“The ACCC plays an important role in keeping power prices down and enforcing the major competition law reforms enacted in 2017 following the Harper review, particularly the strengthening of the prohibition on the misuse of market power,” the government said in a statement.
Following the release of the commission’s interim report on residential mortgages, Mr Sims said: “We do not often see the big four banks vying to offer borrowers the lowest interest rates. Their pricing behaviour seems more accommodating and consistent with maintaining current positions.
“We have seen various references to not wanting to ‘lead the market down’, to have rates that are ‘mid-ranked’ and to ‘maintain orderly market conduct’.”
The ACCC was also delegated the lead role in setting up the rules, educating consumers and enforcing the Consumer Data Right (CDR), which is set to come into effect on 1 July 2019 as part of the open banking regime.
Speaking at the National Consumer Data Policy Research Centre in July, Mr Sims said that the impending CDR was a “fundamental” reform that would help “cut through” the mortgage application process and make product search and comparisons easier and cheaper for borrowers.
“It is often difficult and costly for borrowers to compare the offers of mortgage providers. Discounts off standard variable interest rates are opaque,” the chair of the ACCC said.
“Borrowers often have to lodge an application and provide substantial personal information in order to confirm the interest rate a mortgage provider is willing to offer. The Consumer Data Right will cut through the hassle factor of making comparisons and will reduce the cost to borrowers of discovering and comparing offers.”
Mr Sims further noted that it’s largely businesses that are benefitting from customer data, rather than the customers themselves, stressing the need for there to be a greater balance in power. He added that markets work more effectively when consumers are informed “about the price and quality of offers available to them, the costs consumers incur when switching between providers are small and barriers to entry for new providers are low”.
He pointed out that this was not the case in mortgage markets, further noting that government intervention was justified as banks “cannot be relied upon to make this data available themselves without legislative push from the government”.
[Related: Consumer Data Right to improve mortgage process: ACCC]
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