The ACCC has “got it very wrong” in its decision to allow CBA’s takeover of Count Financial without stipulating the bank offload a share of Mortgage Choice, it has been claimed.
The ACCC last week said it would not oppose Commonwealth Bank’s acquisition of planning group Count Financial. The takeover will deliver CBA a 17% stake in Mortgage Choice. Chief executive Michael Russell said the ACCC had made a misstep in its approval of the deal.
“We've made it abundantly clear in the media in the past few weeks and also in our submission to the ACCC that we had no objection to the transaction, but we thought it made a lot of sense to put a divesting order in place as the conditional precedent to the transaction. The ACCC didn't see it that way,” Russell said.
Russell claimed the competition umpire had “got it very wrong” in its decision, and that the decision was indicative of a continuing decline in competition.
“The problem is that lender competition in this country has been allowed to be eroded bit by bit. That's what's been missed, and that's what regulators over the past 20 years have missed. As lender competition shrinks, the margin between the cash rate and the standard variable rate grows. That's not a coincidence,” he said.
In spite of the deal going ahead, Russell said Mortgage Choice’s consumer proposition would not change. He said the move would not impact the company’s franchisees either.
“It just means we replace one lumpy shareholder with another lumpy shareholder,” Russell said.
While the company remained opposed to CBA holding a substantial share, Russell contended Mortgage Choice’s stance on the acquisition was not a reflection on the company’s relationship with Commonwealth Bank.
“We have a great relationship with CBA. In fact, they won lender of the year at our annual conference. Our relationship with CBA has nothing to do with our comments,” he said.
Russell said that Commonwealth Bank had yet to indicate what it would do with its stake in the company, but argued that the stake had not influenced the bank’s Count takeover.
“We've obviously had discussions with CBA, and to be frank, they haven;t thought of the investment at this point. They're now going to have to think about what this all means, and probably come back to us early next year,” he said.
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