The chairman of the competition regulator, Rod Sims, wants the government to create a new law against “unfair trading practices”, which would not only allow him to tackle the technology platforms but lift standards in the banking sector.
Amending the Australian Consumer Law to make "unfair" trading an offence would go further than the current provisions against misleading and unconscionable conduct and would “have an enormously beneficial effect on corporate behaviour,” he said.
Mr Sims also said he found it "appalling" when companies tried to argue against doing the right thing by customers on the basis that this would lead to a “first mover disadvantage” and see them give up market share to rivals.
“I have [heard] senior banking people say [that]," Mr Sims told a conference hosted by the Banking and Finance Oath. "I understand the profit [motive]. But that is just lousy ethics. And if banks and others get more regulation because they are behaving like that, don’t blame the government.”
“If it is clearly bad, like selling a dud product, they shouldn’t be selling it ... I think it is appalling if banks, or any other company, think there needs to be some general coming together to stop bad behaviour.”
The comments during a panel discussion came after Australian Prudential Regulation Authority chairman Wayne Byres criticised sellers of consumer credit insurance, who "having identified a dubious, but lucrative, practice chose to wait for others to act first", tactics that came under fire in the Hayne royal commission.
“Wearing short-term commercial cost is inevitably difficult, even when it is the right thing to do," Mr Byres said. "A stronger foundation of professionalism, more akin to that for lawyers, accountants and actuaries, would no doubt help.”
Mr Sims said energy companies Origin, AGL and EnergyAustralia had resisted changing door-to-door sales tactics that had triggered many customer complaints on the basis moving first would put them at a disadvantage, which prompted legal action from the ACCC six years ago.
A general “unfair trading practices” power would allow the ACCC to take action against platforms, and companies in other sectors, when it identifies significant consumer detriment even if the conduct was not misleading or unconscionable.
“If you had an unfair practices provision, it could pick up a lot of things. And in terms of the debate in the financial sector it would have a tremendous effect," he said.
The platforms inquiry said the new law should be "defined and targeted, with appropriate legal safeguards and guidance". Mr Sims said Australia is out of step with the United States, Europe, the UK, Canada and Singapore in not having an unfair practices provision.
Mr Sims also warned the banks he remains concerned about the lack of competition in financial services, describing the big four as engaging in "synchronised swimming".
“They move at same time, in the same way. It’s not surprising when you have entities that don’t compete much, because they know if they try to grow share by lowering price, the others will follow, they will all lower their profits and shares won’t change. They absolutely know that and that is the way they behave.
“When you have a lack of competition, you don’t worry about your customers and you get the Hayne royal commission – that is, at the high level, how I see the banking sector.”
After Mr Byres called for a renewed focus on self-regulation to restore trust, Mr Sims said laws can set ethics. “What we think of as right and wrong can come from the law, which can send signals on how companies should behave,” he said.
Read the AFR article.