ACCC to ‘follow through’ on home loan inquiry

In his annual address to the Committee for Economic Development Australia (CEDA), the chair of the Australian Competition and Consumer Commission (ACCC), Rod Sims, announced that mortgages will be a key point of work for the watchdog this year.

Touching on the ACCC’s compliance and enforcement priorities for 2021, Mr Sims revealed that the body “would be following through on recommendations” put forward in its Home Loan Price Inquiry final report.

Mr Sims told delegates: “In the finance sector, we will be following through on the recommendations from the ACCC’s Home Loan Price Inquiry final report, which was released by the Treasurer in December 2020. 

“They included a prompt to alert borrowers to available prevailing rates, and lowering the administrative burden on consumers who wish to switch home loan providers.

“We also have some important investigations underway, and we will be announcing some important enforcement outcomes over the next few months.”

Reviewing NAB-86 400 deal

The chair of the ACCC also revealed that the commission had recently commenced a review into NAB’s acquisition of 86400. 

“With our banking sector dominated by four major banks, it would come as no surprise that we closely examine acquisitions by any one of the major banks, including those involving fintech start-ups,” Mr Sims said.

Indeed, the commission said it would look at reviewing Australia’s merger control regime to ensure it “remains fit for purpose”.

Mr Sims outlined: “Merger control plays a critical role in ensuring that competition is not eroded via mergers. However, in recent years we have become increasingly concerned as to whether Australia’s merger control regime remains fit for purpose and, in particular, whether it is achieving the balance required to ensure good outcomes for consumers and the economy.

“Increasingly, the uncertainty inherent in the forward-looking merger test has become a reason for clearing mergers. Merger parties and the courts are focused on what is likely to happen in the future without the acquisition, which is challenging to ‘prove’ in court. While this is a relevant issue to be considered, it is also open to manipulation, and the focus on the counterfactual in many cases risks overlooking the likely anticompetitive effects of the merger itself,” he said.

He added that the issues were compounded by many of the merger factors that can be used to support a merger being cleared.

“It appears that insufficient weight is placed on the risks to competition, such as potential competition being lost, barriers to entry being raised or competitors being foreclosed,” the ACCC chair explained.

“The net result is that our merger control regime is skewed towards clearance, which presents real challenges for the ACCC in seeking to prevent anticompetitive mergers. 

“As the goal of any merger control regime must be to prevent anti-competitive mergers in order to preserve or promote competition, which will ultimately benefit consumers, we consider that the approach to merger control needs to be rebalanced. We are therefore currently exploring merger law reform options in 2021 to bring about this change,” he concluded.

The ACCC will also be investigating allegations of anti-competitive conduct in the financial services sector.

Other areas of focus for the ACCC this year that may impact the industry include those relating to franchises.

“We will continue our work to ensure that small businesses receive the protections guaranteed by the competition and consumer laws, with a particular focus on the franchise sector,” Mr Sims said.

“The ACCC continues to receive reports about misleading representations made by franchisors about franchises, in particular earnings capacity and the use of marketing funds.”

The body also reportedly has “some important investigations underway, and we will be announcing some important enforcement outcomes over the next few months”.

The chair added that the body would also “watch very closely to look for signs of concerning behaviour” around debt collection as COVID-19 support mechanisms run off.

He said: “Given the additional support provided by the government to businesses and individuals through this COVID period, we have not seen growth in debt collection issues. 

“As we return to more normal funding levels, more people may find themselves in a vulnerable position. We’ll watch very closely to look for signs of concerning behaviour.” 

[Related: ACCC report: 4 ways to improve mortgages]