The ACCC wants another banking inquiry

author-avatar By on September 18,2019
The ACCC wants another banking inquiry

Photo: ACCC

ACCC chairman Rod Sims has reportedly sought approval from Treasurer Josh Frydenberg to conduct another inquiry into banks, according to government and regulatory sources.

The Australian Competition and Consumer Commission (ACCC) and the Treasury have reportedly had initial discussions on the matter but no formal request has yet been made.

The inquiry would apparently zero in on issues of customers being treated unfairly by the big banks, including tactics that discourage customers from switching and the exploitation of existing customers in the form of higher fees and interest rates.

A recent example would be the recent revelations that the big banks are ripping customers off to the tune of hundreds of millions of dollars on international money transfers (IMT), foreign cash, travel cards, and credit cards or debit cards.

This request would put substantial pressure on the Morrison Government, who voted against the banking royal commission 27 times and labelled it “a populist whinge”.

The industry is also under pressure to implement the 76 recommendations from the Hayne banking royal commission, and thus far only two of the 34 recommendations from August 2018’s Competition in the Australian Financial System report (which overlapped with the royal commission) have been implemented.

The other 32 recommendations remain in purgatory, including the recommendation to install “integrity officers” in banks to watch for predatory behaviour.

Mt Frydenberg said “if a request is made the government will consider it in the usual manner”, but is yet to make a public statement on the matter.

Consumer group Choice supports the ACCC request, with director of campaigns Erin Turner telling Newscorp that Choice had an ongoing problem with the lack of banking competition.

“We believe there’s a deep problem on the demand side, ­because it’s incredibly difficult for consumers to make an informed choice about what products will be right for them,” Ms Turner said.

“The issue of customer stickiness should also be investigated — people often remain a customer of the first bank that they got an account with.

“Banks have tactics to catch and keep customers, and the way in which products are sold through intermediaries that don’t act in the best interests of customers can result in them making choices that are not in their best interests.”

Liberal MP and chair of the House of Representatives economics committee Tim Wilson meanwhile said the government still needs to balance regulation against ensuring consumers and business can still access credit.

“Off the back of the royal commission, a clear risk is the potentially burdensome impact of regulation designed for the big four but hitting small-bank competitiveness,” Mr Wilson told The Australian. 

Customer-owned banks welcome the inquiry

Australia’s customer-owned banking sector representative COBA ( Customer Owned Banking Association) said it welcomes the reports of another inquiry.

CEO Michael Lawrence said the request from the ACCC, as well as Tim Wilson’s comments, were encouraging and could lead to a more competitive banking market.

“The enduring solution to concerns about the banking market is action to promote competition,” Mr Lawrence said.

“We don’t have sustainable banking competition at the moment. A lack of competition can contribute to inappropriate conduct by firms, and insufficient choice, limited access and poor-quality products for consumers.

“We strongly support the ACCC’s calls for an inquiry to examine the banking industry’s competitiveness. It’s encouraging to see that the ACCC and Tim Wilson MP share our sector’s concerns about competition and what an uncompetitive banking market means for consumers.”

Mr Lawrence also said the regulatory framework in the banking sector has “entrenched” the dominant position of the largest banks.

“The PC (productivity commission) report shone a light on a problem that is not well enough recognised – that more and more regulation can be harmful to consumers because it weakens competition,” he said.

“The Productivity Commission found that competition drives innovation and overall value for customers.

 “The Financial Services Royal Commission looked into misconduct, now is the time to look into competition.”


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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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