The New Zealand Commerce Commission (NZCC) announced on 21 June 2023 that it has opened a market study into personal banking services.

This market study will assess how well competition is working in the banking sector, including whether certain behaviours or barriers are preventing competition from driving banks to offer the quality of services that consumers deserve.

Below we have set out information on the general market study process and potential outcomes. We also set out further recent regulatory developments in response to the NZCC’s findings in its earlier market study into the grocery sector.

Key takeaways

  • The NZCC is going to undertake a 14-month long investigation into how well competition is working in the banking sector.
  • If the NZCC finds competition is not working well, the NZCC will make recommendations to the Government aimed at increasing competition to improve price and quality for consumers.
  • We are still seeing measures to improve competition being put in place by the Government following the earlier market study into the grocery sector, including the recent release of a draft Grocery Code of Conduct which seeks to address imbalances in bargaining power between suppliers and the main supermarket duopoly.

What is a market study, and how do they work?

In a market study the NZCC examines the features of a market more broadly to assess whether there is effective or “workable” competition in that market.

Market studies can be self-initiated by the NZCC or required by the Minister of Commerce and Consumer Affairs (Minister). In this instance, the market study into banking was initiated by the Minister in a Gazette notice, which requires that the market study considers (among other things):

  1. The structure of the banking industry and the nature of competition;
  2. Any barriers to consumers comparing bank offers or switching banks, including whether certain products or services are tied or bundled; and
  3. Any impediments to new or innovative banking products or services.

The NZCC has advised that focus areas of its market study will include current accounts, deposit accounts, overdraft account services, personal loans, and mortgage and credit card lending. There will be less of a focus on financial services such as KiwiSaver and wealth management. The market study may also include outcomes of the competitive process, such as bank profits. 

The NZCC has said it will release a Preliminary Issues Paper by August 2023 which will set out the areas the study will consider, which will likely include the structure of the industry and the nature of competition in personal banking, the conditions of market entry and expansion, consumer behaviours and preferences, and other areas that might be explored. 

On 22 June 2023, the NZCC published a Statement of Process detailing how the market study will unfold over the next 14 months in the following stages:

  1. Initial information-gathering: The NZCC will first gather information relevant to the study from a range of sources, including directly from market participants and consumers. This stage will take place during June and July 2023. 
  2. Preliminary issues paper (PIP): Following initial information gathering, the NZCC will release a Preliminary Issues Paper by August 2023 as set out above. Stakeholders and interested parties will be invited to make submissions on the proposed approach and preliminary issues. 
  3. Further information-gathering: The NZCC will continue to gather information through engagement with stakeholders. This may be done on a voluntary or compulsory basis. This stage will take place between July and October 2023. 
  4. Testing information: Between September 2023 and February 2024 the NZCC will test the information it has gathered and conduct its analysis. 
  5. Publishing draft report & considering comments: Around March 2024, the NZCC will then publish a draft report setting out its preliminary findings, which interested parties may comment on. The NZCC will invite written comments on the draft report, but may also then hold “consultation conferences” to further test its findings with interested parties and to discuss any comments already received. Between April 2024 and August 2024 the NZCC will consider these responses. 
  6. Publishing final report: The NZCC will lastly prepare and publish a final report setting out any recommendations, which it anticipates releasing publicly on 20 August 2024. 

Potential outcomes of any market study include a “clean bill of health”, recommendations intended to enhance competition in the sector, or potentially enforcement action if the NZCC becomes aware of conduct that could breach the Commerce Act 1986.

New grocery sector regulations on the horizon

In other news, new grocery regulations are on the horizon following the NZCC’s earlier market study into New Zealand’s grocery sector.

In that market study, which concluded in March 2022, the NZCC found that competition in the grocery sector was not working well for consumers. In particular, the NZCC found that competition between the main supermarket duopoly, Woolworths NZ and Foodstuffs, was muted.

Since the market study concluded, a variety of measures have been implemented, including the introduction of legislation prohibiting restrictive covenants which inhibit competition in supply of groceries and, more recently, progressing the Grocery Industry Competition Bill and Grocery Code of Conduct.

The Grocery Industry Competition Bill proposes a suite of changes which are aimed at addressing the supermarket duopoly’s excess profits, including by introducing a wholesale supply regulatory regime. This Bill also provides for regulations setting out a Code of Conduct which is aimed at improving conditions for suppliers in their dealings with supermarkets. This Code of Conduct will be regulated by the NZCC and there will be civil penalties available if it is breached.

The Grocery Industry Competition Bill passed its third and final reading in Parliament on 21 June 2023 and is expected to receive Royal Assent very soon. The majority of the Bill will come into effect 14 days after Royal Assent is received. In the meantime, the Ministry of Business, Innovation and Employment has released a draft Code of Conduct. MBIE is taking submissions on the draft Code of Conduct, which are due on 5 July 2023.

Get in touch

If you would like to know anything further about the upcoming market study into the banking sector, or about submitting on the grocery Code of Conduct, please get in touch with one of the contacts listed on this page.


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