Price-signalling ban applies only to deposits and loans

The Government's ban on price-signalling by banks will be limited in its application to deposit-taking and lending and will have no impact on other activities, such as insurance or wealth management.

The new price-signalling regulation, which will take effect on June 6, was registered this week.

In December 2010, the Government announced that it would introduce laws to prohibit anti-competitive price signalling as part of its banking reform package, A Competitive and Sustainable Banking System.

The Competition and Consumer Act was amended last year to prohibit the disclosure of pricing information between competitors that is not made in the normal course of business.

The amendment also prohibited the disclosure of pricing or other information if the disclosure is made for the purpose of substantially lessening competition.

The prohibitions apply to goods or services prescribed by regulation.

Competition and Consumer Amendment Regulation 2012 (No.1) applies the prohibition to the banking sector, which it defines as approved deposit-taking institutions.

The regulation prescribes disclosures that involve "either taking money on deposit (otherwise than as part payment for identified goods or services) or making advances of money."

But the regulation recognises that ADIs may carry on a wider range of activities than just "banking business". The prohibition will only apply to "goods and services provided by ADIs that relate to the taking of money on deposit or making advances of money."

A disclosure related to an activity outside of banking, such as the provision of travel insurance (the example given in the explanatory memorandum accompanying the regulation), is not intended to be captured by the regulation.