No lack of jobs for ACCC and Australian Consumer Law grows more teeth
The Turnbull Government’s second Budget gives the Australian Competition and Consumer Commission (ACCC) new funds for new jobs, hikes penalties for Australian Consumer Law (ACL) contraventions, and introduces measures for more competitive and fairer energy and banking sectors.
A more competitive and consumer friendly financial sector
The ACCC will receive $13.2 million over the next four years to establish a dedicated unit to undertake regular inquiries into specific financial sector competition issues. This measure is aimed at facilitating greater scrutiny of competition issues in Australia’s financial sector, which the Government said has been lacking to date.
The measure comes on the back of a recommendation of the House of Representatives Standing Committee on Economics report into the banks.
The Productivity Commission has also been tasked with a review into the state of competition in the financial system. The Commission will look at improving consumer outcomes, productivity in and the international competitiveness of Australia’s financial system, and supporting innovation in the system, while balancing these with the financial stability objectives. The report will be furnished to the Government in 12 months.
The Government has also announced it will reduce regulatory barriers to entry for new entrants into the banking system. The 15% ownership cap for substantial shareholders in Authorised Deposit-Taking Institutions (ADIs) will be relaxed, and the current prohibition on ADIs from using the term “bank” will be repealed (the prohibition exists for ADIs with less than $50 million in capital).
Mortgage pricing inquiry
The ACCC will be tasked with undertaking a mortgage pricing inquiry as part of the Government’s announced major bank levy (on ADIs with entity liabilities of at least $100 billion). The ACCC will ask ADIs to explain changes or proposed changes to residential mortgage prices in a bid to ensure that the cost of the major bank levy is not passed on to consumers.
Penalties hike for the Australian Consumer Law
From 1 July 2018 penalties for contraventions of the ACL will increase in line with the competition provisions in the Competition and Consumer Act (subject to legislation passing both houses).
For companies, the maximum penalty will be the greater of:
- $10 million; or
- three times the value of the benefit received by a company from the contravention; or
- 10 per cent of the annual turnover of the company in the preceding 12 months (if the benefit cannot be determined).
For individuals, the maximum penalty will rise to $500,000 (although State and Territory governments will have to agree).
Australian Labor has welcomed the measure but has expressed concern it does not go far enough. It wants maximum penalties raised for anti-competitive conduct as well as ACL contraventions, and a doubling of the ACCC’s litigation budget.
The Government will give the ACCC an extra $7 million to monitor nbn broadband speeds. A new “Broadband Performance Monitoring and Reporting” program will be introduced that will provide consumers with access to information on expected speeds and experiences from nbn services.
This follows numerous complaints to the ACCC from broadband customers about speeds they are getting. ACCC Chairman Rod Sims said, “There is a lot of stories about people not getting the speeds they were expecting or they were sold”.
The data being collected under the monitoring program is hoped to assist consumers choose an appropriate plan and to encourage retailers to compete on quality.
Energy for the future
$6.6 million will be given to the ACCC over the next 3 years to establish a monitoring regime for the Australian gas market. The ACCC will be tasked with using its information gathering and inquiry powers to compel industry participants to provide greater transparency of their dealings in the gas market (including factors affecting supply and pricing).
The Government will also provide $7.9 million to the ACCC to for its inquiry into retail electricity prices. The inquiry will focus on the key cost components of electricity prices, whether retailers’ profits are commensurate with their costs and risk profiles, and consumer choice issues (amongst others).
The Australian Energy Regulator (AER) can also expect additional funding. $8 million will be given to the AER to ensure it is sufficiently resourced and well placed to undertake its regulatory functions.
The Government hopes this will benefit consumers from enhanced competition and allowing the Australian energy markets to operate more fairly and efficiently.