The market power of the big banks under close surveillance by the ACCC
The Commonwealth Bank of Australia (CBA) announced earlier this month that it is investing AU $ 50 million to take a stake in two startups. It took a 23% stake in online shopping start-up Little Birdie and a 25% stake in Amber, which provides subscription access to wholesale electricity prices.
Westpac, meanwhile, has partnered with Afterpay, the buy-it-now, late-pay player to offer white-label services.
After previously saying he welcomed competition in FinTech, but not for the sole purpose of lining the pockets of the country’s biggest banks, the chairman of the Australian Competition and Consumer Commission ( ACCC), Rod Sims, said he was keeping a close eye on the area.
“The Commonwealth Bank is – it probably has 25% of the mortgage market, it’s obviously the biggest bank – but in terms of what it does, there are a lot of other players in the market,” he said. Sims said to Senate estimates. Wednesday night.
“I’m definitely happy to keep an eye on it, but I think with everything going on in the market it would be a bit early to call it market power. It’s an interesting development they’re trying to do. match a range of other digital readers [like] fintechs offering various services. “
He said the ACCC almost sees it as an encouraging sign to improve the mix of economic activity.
“But I accept that they are a big player and when big players do things like that we have to watch carefully,” he added.
“The four have tremendous power. If they’re supporting something, that’s good, they’re all doing the same.”
On Westpac, Sims said it was also “early enough”.
“This is part of all the rich developments going on, which we are watching very closely. And there are a number of white label services provided by various banks. Citibank, for example, provides white-label credit card services, “said the head of ACCC. Added General Manager of Specialized Enforcement and Advocacy Marcus Bezzi.
“In a sense, what Westpac does is a pro-competitive thing, getting into a business that allows Afterpay to provide a full range of services than it currently does.”
Bezzi said he sees this as a way for fintech to become a more viable competitor in the financial services market.
AFCA requires access to financial data to do its job
The Australian Financial Complaints Authority (AFCA) is struggling to meet its obligation to monitor material consumer damages in financial services, mainly because the federal government has not yet given it powers to collect credit. data.
“There are a few areas where AFCA is data poor, and in large part, it’s because we don’t have data collection powers,” the Australian Commission Vice-President said on Wednesday. Securities and Investments (ASIC), Karen Chester, to Senate estimates.
“Yes, we can go out and advise entities, but doing it entity by entity… is a hugely resource-intensive task. It is opportune [and] expensive.”
The areas where AFCA lacks data, Chester said, are management investment programs, which she called the “building blocks of our entire super system.”
“We don’t have recurring data collection rights over there in insurance; because we work with APRA, they have data collection rights that we can leverage. Great, again, we have to leverage APRA, ”she explained. .
The other area where the complaints authority has struggled is the non-bank lending sector.
“There are so many different business models, we don’t have data collection powers there. And now we’re in a world where you can have a consumer who will have, say, a relationship with the ABC, their debt situation might look good, but you factor in buy it now, pay later or payday lender, consumer leasing white goods – we have no history of cumulative debt, ”Chester explained.
“And that’s fundamental for us to understand – where is the tipping point for significant consumer harm?
“There are three or four areas where we just don’t have the data collection powers.”
Chester said she would prefer quick access to information so the agency doesn’t “soak up spilled milk” after misconduct.
“It’s the first base. The second base on the climb to Everest is really making sure we have the data capabilities and the investments … we decided to reallocate the money ourselves to make data capabilities a priority and we are doing it, but we are poor in capital spending, ”she said.
“This is what we really need in order to be able to truly respond to what Parliament expects, and the Senate expects of us, with the new powers that we have gratefully received.”
Internally, Chester said the agency has made data a priority, reallocating the funds it has to employ a data analyst and implement a data strategy.
“We are improving the skills of our lawyers, we are doing everything we can to help the capabilities. [We’re] ready to go, but we need the real data, so we need the powers to be able to do it, ”she said.
‘Legitimate’ Crypto Firms Should Make Their Own
ASIC said it saw an increase in cryptocurrency-related scams this year, which Commissioner Cathie Armor called quite dramatic.
“We’ve seen an increase in crypto investment scams during the first part of this year, and it’s been both Australia and Australia scams, if you will, and it’s been pretty dramatic, the increase in this scam activity, ”she said. senators.
Armor said ASIC has set up a task force to try and resolve the scams problem as proactively as possible, but his advice for any new business that gets into cryptocurrency would be to contact the regulator before attention is drawn to it for any negative element. right.
“I think one way for an innovative new company to differentiate itself is to actually fit within the regulatory scope, rather than operate,” she said.
“If they’re able to do it, because in some ways it’s probably a really good distinguishing factor for the company.
“I encourage all crypto asset companies to consider whether they can do this.”
On how to prevent scams from reaching Australians, however, Armor said it was a matter of government policy.