There are four main options regarding the regulation of consumer protection in the financial services sector, Australian Competition and Consumer Commission Chairman, Professor Allan Fels, told an Economic Society seminar in Melbourne today.

"They are:

  • the status quo;
  • industry self regulation;
  • the establishment of a new consumer financial services protection regulator; and
  • a system of co-regulation combining industry self regulation with accountability to and oversight by Government.

"The ACCC favours the last of these options and in its submission to the Wallis Inquiry next week will discuss some of the details of this concept," Professor Fels said.


"The ACCC believes that the financial services sector should be 'Hilmerised'. The principles of competition policy as stated in the Hilmer Report and subsequently adopted by all Governments as part of the Competition Principles Agreement, should apply to the financial services sector.

"This means:

  • all laws and regulations in the financial services sector which restrict competition unjustifiably should be repealed or minimised;
  • the principle of competitive neutrality should apply, that is any regulatory arrangements should not confer a special advantage or disadvantage on any part of the financial sector compared with any other part unless there is a good reason for it. From this point of view any scheme of prudential regulation should, other things being equal, not confer special advantages or disadvantages on parts of the financial services sector, unless there are justifiable prudential reasons;
  • similarly no laws should unjustifiably discriminate against particular parts of the financial services sector;
  • the competition and consumer protection parts of the Trade Practices Act should apply in full to the financial services sector; and
  • the ACCC notes that it will be soon be considering an authorisation application from the Australian Payments System Council (APSC) which relates to access to payments system in relation to electronic means of payment such as ATM and EFTPOS and also notes its recent authorisation decision in relation to paper transactions."


"The ACCCs approach to mergers remains the same as when it last issued a statement on this topic in September 1995 when deciding that it would not oppose Westpacs acquisition of the Challenge Bank in Western Australia.

"At that time it stressed that it had a case by case approach to mergers. This approach enabled it to take account of the particular nature of any merger transaction and also enabled it to take account of any structural changes in the financial services sector relevant to the assessment of competition.

"In September 1996, the question of mergers between major trading banks is an academic one because the Treasurer has ruled out any such mergers this side of the Wallis Inquiry. Any outcomes of the Wallis Inquiry in terms of its impact on industry structure will, of course, be a factor taken into account by the ACCC in analysing the state of competition as part of its consideration of any future proposed bank mergers.

"As part of the 'Hilmerisation' of the financial services sector, the ACCC recommends that restrictions on bank mergers imposed by bank shareholding and foreign ownership legislation should be lifted. If our financial services sector is to aspire to globalisation it seems hardly consistent that there should be restrictions within Australia on foreign ownership.

"The ACCC believes it is appropriate that any competition issues which arise in financial services sector mergers should be dealt with by the ACCC and that the Treasurers role in adjudging such mergers should be restricted to any prudential questions that may arise.

"The ACCC notes that at the time of the ANZ/National Mutual Ltd proposed merger it did not consider that that merger would have posed competition policy law problems."

Copies of Professor Fels' paper is available from ACCC offices.