The ACCC proposes to deny authorisation to the Commonwealth Bank, Westpac, ANZ, NAB and Macquarie Bank to establish a voluntary program for participating mortgage lenders to jointly procure assurance reviews of the compliance systems and standards of participating mortgage aggregators.

Mortgage aggregators serve as intermediaries between mortgage brokers and lenders, and assist brokers in providing their services to consumers. As part of managing the risk and compliance obligations of their mortgage broker networks, lenders currently individually arrange for assurance reviews of the compliance systems of each aggregator they deal with. The program would allow lenders to jointly arrange, and to share the cost of, aggregator assurance reviews.

All mortgage lenders will be able to join the program. However, the Applicants, who are the 5 largest banks in Australia, will be the key decision-makers in the operation of the program. The ACCC is concerned that this may result in the program being operated in way that prioritises the Applicants’ interests over smaller lenders.

Additionally, the ACCC considers it is uncertain whether the program is likely to result in assurance reviews being conducted to a higher or lower standard. To the extent that assurance reviews are performed to a lower standard, this increases the risk of inappropriate lending practices. The ACCC also considers that, by increasing the frequency and points of interaction between the major bank lenders, the program is likely to make the market more conducive to coordination.

The ACCC considers that the proposed program will likely result in efficiencies and cost savings for both mortgage lenders and aggregators, but the extent of these efficiencies and savings will depend on take up of the program. If the program is operated in a way which prioritises the needs of larger lenders over smaller lenders, take up would be expected to be lower.

On balance, the ACCC is not satisfied in all the circumstances that the proposed conduct is likely to result in a net public benefit.

The ACCC is now seeking submissions in response to the draft determination by 3 October 2023 before making its final determination. Further details about the application and how to make a submission are available on the ACCC's public register at: Commonwealth Bank of Australia and Ors.