ACCC notes withdrawal of basic bank account agreement proposal

The Australian Competition and Consumer Commission noted today that the Australian Bankers' Association had withdrawn an application for authorisation* of a proposed arrangement by 10 member banks** to collectively agree to offer a basic bank account with agreed minimum features to low income consumers.

The decision comes after the ACCC announced that it intended to reject the proposal because it was concerned that it had the potential to dampen competition between the major banks and result in the proposed minimum features becoming the de facto industry standard. In its draft determination the ACCC noted that existing banking products for low income consumers, on the whole, had better features than the proposed basic bank account.

"The ACCC continues to strongly support the need for improvements in the current level of banking services available to low-income consumers", ACCC Chairman, Professor Allan Fels, said today.

"The ACCC had told the banks that it had formed the view the proposal did not go far enough to result in a net benefit to consumers and had indicated that it would welcome a substantially enhanced initiative. The banks have decided to withdraw the application rather than come back to the ACCC with a proposal that would be likely to improve service levels for low income earners."

Background

*The Trade Practices Act 1974 prohibits competitors agreeing to work together in a way that substantially reduces competition between them. Authorisation provides immunity from court action arising from such agreements but can only be granted where the ACCC is satisfied that the public benefit arising from the conduct outweighs any public detriment.

**The ABA applied for authorisation of behalf of the National Australia Bank, Commonwealth Bank, Australia and New Zealand Bank, Westpac Banking Corporation, Bank Western Australia, Adelaide Bank, St George Bank, Suncorp Metway Bank, Bank of Queensland, and Bendigo Bank.