Notice of Inquiry into residential mortgage products
On 9 May 2017 the Treasurer, the Hon Scott Morrison MP, issued a notice requiring the Australian Competition and Consumer Commission (ACCC) to hold an Inquiry into prices charged or proposed to be charged by Authorised Deposit-taking Institutions affected by the Major Bank Levy in relation to the provision of residential mortgage products in the banking industry in Australia from 9 May 2017 until 30 June 2018. The Inquiry is pursuant to subsection 95H(1) of the Competition and Consumer Act 2010.
The Inquiry will examine residential mortgage products offered by Australia’s major banks.
In undertaking the Inquiry, the ACCC has been directed to have regard to the Government’s view that banks need to fully and transparently account for their decisions and how the banks balance the needs of borrowers, savers, shareholders and the wider community.
Conduct of the Inquiry
The Inquiry commenced on 9 May 2017.
The ACCC must submit a final report to the Treasurer at the conclusion of the Inquiry.
This is not an Inquiry in relation to supply by any particular person or persons.
The ACCC can hold public hearings for the purposes of the Inquiry. The times and locations of any hearings will be determined and published on the ACCC’s website at a later date.
Further information about the Inquiry can be found on the ACCC’s website (www.accc.gov.au/banking).
Overview
The Competition and Consumer Act 2010 was enacted to provide a framework for fair trading and consumer protection in Australia. The Act was introduced to address various issues related to unfair trading practices, consumer rights, and competition within the marketplace. The enactment body for this legislation was the Commonwealth Parliament, reflecting the federal nature of the Australian legal system. In May 2017, a notice was issued under the Act, directing the Australian Competition and Consumer Commission (ACCC) to conduct an Inquiry into the residential mortgage products offered by major banks. This Inquiry was established to examine the prices charged for these products and to ensure that banks adequately consider the needs of borrowers, savers, shareholders, and the wider community. The policy objective behind this Inquiry was to promote transparency and accountability within the banking industry, particularly in light of the Major Bank Levy introduced by the government. The ACCC was tasked with submitting a final report to the Treasurer, which would provide insights and recommendations based on the findings of the Inquiry.
Scope and Application
The Inquiry into residential mortgage products, as directed by the Treasurer through the Competition and Consumer Act 2010, applies to Authorised Deposit-taking Institutions (ADIs) within Australia, specifically focusing on the major banks. These entities are required to account for their decisions regarding the pricing of residential mortgage products, ensuring that they fully and transparently consider the interests of borrowers, savers, shareholders, and the broader community. The geographic reach of this Inquiry is national, encompassing all major banks operating in Australia. The Inquiry's mandate is to scrutinise the conduct and pricing strategies of these banks in relation to residential mortgage products from 9 May 2017 until 30 June 2018. The ACCC, as the body conducting the Inquiry, has the flexibility to hold public hearings, the details of which will be communicated via their website. This legislative action does not target specific individuals or entities but rather examines broader industry practices and pricing mechanisms within the banking sector.
Key Provisions
The key operative sections of the legislation (subsection 95H(1) of the Competition and Consumer Act 2010) direct the Australian Competition and Consumer Commission (ACCC) to conduct an Inquiry into the residential mortgage products offered by major banks, with a focus on the period from 9 May 2017 until 30 June 2018. The Treasurer, the Hon Scott Morrison MP, issued a notice on 9 May 2017, which mandates the Inquiry. This Inquiry aims to examine the prices charged or proposed to be charged by Authorised Deposit-taking Institutions affected by the Major Bank Levy, with a particular emphasis on transparency and the balancing of interests among borrowers, savers, shareholders, and the wider community.
The obligations imposed by this legislation on the ACCC are significant. They require the ACCC to conduct a thorough examination of the residential mortgage products provided by major banks within the specified timeframe. The ACCC must consider the Government's perspective that banks should provide a full and transparent account of their decisions. Furthermore, the ACCC is authorised to hold public hearings to facilitate the Inquiry. These hearings will be scheduled and their details published on the ACCC’s website, ensuring transparency and accessibility for all stakeholders.
In terms of the consequences for breaches of this legislation, it is important to note that the specific offences, penalties, or civil/criminal consequences are not explicitly detailed in the provided text. However, it can be inferred that any failure to comply with the requirements of the Inquiry or any obstruction of the ACCC's investigative processes could potentially lead to legal repercussions. Given the nature of the Inquiry and the involvement of major financial institutions, breaches may result in significant regulatory action, which could include fines or other penalties as prescribed by the Competition and Consumer Act 2010. The precise nature and extent of penalties would be determined in the context of any legal proceedings that arise from non-compliance.