ACCC allows AMS Mortgage Services Pty Ltd to waive home loan contract exit fees

AMS Mortgage Services Pty Ltd proposes to waive the deferred administration fee for early termination of Wizard branded home loans where a customer chooses to refinance with Aussie Home Loans.

The Australian Competition and Consumer Commission will permit this arrangement which involves third line forcing, after a notification was lodged by AMS.

Third line forcing is a type of exclusive dealing conduct prohibited by the Trade Practices Act 1974.  It involves the supply of goods or services on condition that the purchaser acquires goods or services from a particular third party.  By lodging a notification with the ACCC, businesses may obtain protection from legal proceedings under the Act. Provided the ACCC does not object, protection commences 14 days after lodgment.

Under the Act, the ACCC will only object to and remove the immunity provided by an exclusive dealing notification when it is satisfied that any public benefits from the proposed arrangement would not outweigh the public detriments.

"The ACCC considers the arrangement will result in cost savings for customers who choose to refinance with Aussie, by relieving them of their contractual commitment to pay the deferred administration fee," ACCC Chairman, Mr Graeme Samuel, said.

"The fee waiver offer was required by Aussie as a condition of its recent acquisition of the Wizard home loans business.  To the extent that the arrangement encourages other brokers or lenders to make similar offers, the ACCC considers that it may encourage competition in relation to AMS customers."

The ACCC notes that customers can choose not to take up AMS' offer and instead, refinance with another broker or lender offering a product that better suits their needs.

A number of customers complained about AMS's level of service and its decision not to pass on recent interest rate cuts.  The ACCC notes that these issues are likely to exist regardless of the AMS fee waiver offer, and therefore are not directly relevant to the assessment of the notification.  However, the ACCC remains concerned about these complaints and will continue to discuss the issues with affected customers and the Australian Securities and Investments Commission, which is responsible for consumer protection matters in financial services.

The assessment of the notifications will be available from the ACCC's website under the authorisations and notifications public register.