EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Competition and Consumer Act 2010
Competition and Consumer (Price Inquiry—Retail Deposit Products) Direction 2023
Section 95H of the Competition and Consumer Act 2010 (the Act) provides that the Minister may require the Australian Competition and Consumer Commission (ACCC) to hold an inquiry into a specified matter or matters.
The Competition and Consumer (Price Inquiry—Retail Deposit Products) Direction 2023 (the Direction) is made under subsection 95H(1) of the Act. The Direction requires the ACCC to hold a price inquiry into retail deposit products.
The inquiry will offer valuable transparency around bank pricing decisions and support competition in the retail deposit market.
Part 1 of the Direction provides the machinery provisions of the instrument, including the definitions.
Part 2 of the Direction provides the terms of reference for the inquiry and guidance on matters the ACCC is to take into consideration in holding the inquiry. The ACCC must have particular regard to the terms and conditions on which retail deposit products are supplied (including interest rates), strategies taken by suppliers of deposit products, and supplier decisions relating to terms and conditions for retail deposit products following changes in the Reserve Bank of Australia’s target for the cash rate. The ACCC must also consider the nature and extent of price and non-price competition in the supply of retail deposit products and the use of retail deposit products as a source of funding for suppliers.
The ACCC must provide a final report to the Treasurer by no later than 1 December 2023.
In accordance with section 17 of the Legislation Act 2003, the ACCC has been consulted on the terms of the Direction.
The Direction is a legislative instrument for the purposes of the Legislation Act 2003. In accordance with item 2 of the table in section 9 and item 3 of the table in section 11 of the Legislation (Exemptions and Other Matters) Regulation 2015, the instrument is not disallowable and does not sunset as it is a direction by a Minister to a person or body. It is appropriate that this instrument is not disallowable as it is a Ministerial direction, and therefore executive control is intended. Similarly, the direction is intended to remain in place until the inquiry is completed or unless and until revoked by the Treasurer, and therefore it is appropriate that it not sunset.
The Direction commences the day after the instrument is registered.
Regulation Impact Statement
The Direction has been assessed as having no more than a minor regulatory impact (Office of Impact Analysis Reference Number OBPR23-04199). Accordingly, no Impact Analysis has been prepared.
A statement of Compatibility with Human Rights is at Attachment A.
ATTACHMENT A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Competition and Consumer (Price Inquiry–Retail Deposit Products) Direction 2023
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
Section 95H of the Competition and Consumer Act 2010 provides that the Minister may require the Australian Competition and Consumer Commission (ACCC) to hold an inquiry into a specified matter or matters.
The Competition and Consumer (Price Inquiry–Retail Deposit Products) Direction 2023 (the Direction) is a direction to the Chairperson of the ACCC to hold a price inquiry into retail deposit products.
The Direction sets out the terms of reference for the inquiry. The ACCC must provide a final report to the Treasurer by no later than 1 December 2023.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms, as it only requires the ACCC to conduct a pricing inquiry.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Overview
The Competition and Consumer (Price Inquiry—Retail Deposit Products) Direction 2023 was issued by the Treasurer under the authority of the Competition and Consumer Act 2010. This legislative instrument was enacted to address transparency and competition concerns within the retail deposit market. The Parliament of Australia authorised the Minister to require the Australian Competition and Consumer Commission (ACCC) to hold an inquiry into specified matters, including retail deposit products. The policy objective of this Direction is to provide valuable insights into bank pricing decisions and support competition in the retail deposit market. The ACCC must have particular regard to the terms and conditions on which retail deposit products are supplied, strategies taken by suppliers, and decisions relating to terms and conditions following changes in the Reserve Bank of Australia’s target for the cash rate. The ACCC is also to consider the nature and extent of competition in the supply of retail deposit products and the use of these products as a source of funding for suppliers. The ACCC is required to provide a final report to the Treasurer by 1 December 2023.
Scope and Application
The Competition and Consumer (Price Inquiry—Retail Deposit Products) Direction 2023 is a legislative instrument made under Section 95H of the Competition and Consumer Act 2010, which mandates the Australian Competition and Consumer Commission (ACCC) to undertake a price inquiry into retail deposit products. This Direction applies to the ACCC, requiring it to focus on various aspects such as the terms and conditions, interest rates, and strategies of suppliers of retail deposit products, as well as their decisions following changes in the Reserve Bank of Australia’s target for the cash rate. Additionally, the inquiry will consider the competition in the retail deposit market and the use of these products as a funding source. The Direction applies nationally across Australia, and it is intended to remain in effect until the inquiry is concluded. The ACCC is required to deliver a final report to the Treasurer by no later than 1 December 2023. The Direction does not impose any exclusions or exemptions and does not specify any particular thresholds. The instrument is not disallowable and does not sunset, reflecting its executive nature and the intended permanence until the inquiry is completed or the Direction is revoked.
Key Provisions
The Competition and Consumer (Price Inquiry–Retail Deposit Products) Direction 2023, made under section 95H of the Competition and Consumer Act 2010, requires the Australian Competition and Consumer Commission (ACCC) to conduct a price inquiry into retail deposit products (Section 1). This inquiry aims to provide transparency in bank pricing decisions and foster competition in the retail deposit market. The ACCC is tasked with examining the terms and conditions of retail deposit products, including interest rates, and the strategies employed by suppliers in response to changes in the Reserve Bank of Australia’s target for the cash rate. Additionally, the inquiry will delve into the nature and extent of competition in the supply of these products and their role as a funding source for suppliers (Section 2). The ACCC must submit a final report to the Treasurer by 1 December 2023.
The Direction imposes specific obligations on the ACCC to conduct a thorough and comprehensive inquiry into the retail deposit products market. The ACCC must consider various factors such as the terms and conditions of the products, supplier strategies, and the impact of changes in the cash rate on pricing decisions. Furthermore, the inquiry should explore the competitive landscape, including both price and non-price competition, as well as the role of retail deposit products in the funding strategies of financial institutions. This extensive scope ensures that the inquiry covers all critical aspects of the market, providing a detailed understanding of current practices and their implications for consumers and competition.
The Direction itself does not explicitly outline specific offences or penalties for non-compliance, as it is a directive rather than a regulatory instrument imposing sanctions. However, failure to adhere to the terms of the Direction could lead to broader consequences under the Competition and Consumer Act 2010. For instance, any entity failing to cooperate with the inquiry or provide necessary information could face legal action under the Act, potentially leading to fines and other penalties. The maximum penalties for breaches of the Act can be significant, with corporate entities facing fines of up to $1.1 million and individuals potentially facing penalties of up to $220,000 for serious offences. These potential repercussions underscore the importance of compliance with the inquiry's requirements.