Banks should not expect the Australian Competition and Consumer Commission to be as accommodating or indeed as reactive to situations as it once was, now it has funding to go on the front foot.This was one of the messages to emerge from a major keynote presentation by ACCC Chairman Rod Sims at the AFR Banking and Wealth Summit. ""As the economy-wide competition and consumer regulator, the ACCC has always had a role in the banking sector," said Sims."We've also always had a role in considering mergers in the banking sector."What has changed is the setting up of a permanent team inside the ACCC, the Financial Services Unit, to investigate competition in the banking and financial system. This concept was originally a recommendation of the Coleman Committee Review of the Four Major Banks in November 2016.Simms said the FSU will undertake regular inquiries into specific financial service competition issues, and so facilitate greater competition in the sector, starting with the current Residential Mortgage Price Inquiry; the interim report was released on 15 March."Clearly our role in the financial sector will be more active than it has been in the past," Sims said."Our interim report indicates quite clearly, based on evidence we have collected, that not only does competition in the banking sector need to improve, but that where there appears to be competition it may often be illusory."To compare one product with another is difficult and complex."Borrowers essentially need to go through the time-consuming process of lodging an application with multiple lenders in order to make an informed decision," Sims said.When it comes to residential mortgages, it pays to be a new customer as discounts are a key tool used by residential mortgage lenders to secure new borrowers."Our observation that loyal customers pay higher mortgage interest rates, on average, than new borrowers indicates clearly that loyal customers are not seeing the benefits that vigorous price competition would be expected to provide."This goes to the heart of the problem in banking and confirms long-held consumer suspicions, Sims told the delegates."Internal documents reviewed by the ACCC reveal a lack of vigorous price competition between the five Inquiry Banks (ANZ, Commonwealth, NAB, Westpac and Macquarie), and the big four banks in particular. In fact, their behaviour more resembles synchronised swimming than it does vigorous competition," he said."What we found is that the pricing behaviour of the Inquiry Banks appears more consistent with 'accommodating' a shared interest in avoiding the disruption of mutually beneficial pricing outcomes, rather than vying for market share by offering the lowest interest rates."Then there were the internal communications, with references to the need to avoid disrupting mutually beneficial pricing outcomes, to "encouraging rational market conduct", "maintaining orderly market conduct" and maintaining "industry conduct".There were also references to a desire to have interest rates that are "mid-ranking", and to the need not to "lead the market down".Soon after June 30 this year, the ACCC will be releasing its final report into residential mortgages. "Our focus will then turn to how best