Questions raised over ACCC decision

The Australian Competition and Consumer Commission (ACCC) appears to have significantly over-estimated the impact on the Australian platforms market of National Australia Bank (NAB) gaining control of AXA Asia Pacific (AXA AP).

Analysis undertaken by leading platforms research house Wealth Insights, into how the Australian platform market would look following a NAB acquisition of AXA AP — or, alternatively, an AMP Limited acquisition of the company — reveals there would be no substantial change in the balance of power.

It reveals that the market would still be dominated by three big banks: Westpac, the Commonwealth and NAB — with NAB still running third. Much greater change to the overall balance would occur if an AMP bid proved successful.

Wealth Insights managing director Vanessa McMahon points out that the graph (below) shows the proportion of advisers who use platforms offered by the providers listed, rather than the proportion of funds under management.

McMahon is among those puzzled by the reasoning behind the ACCC’s decision to veto the NAB bid. When contacted by Money Management, she said that while there existed a set of platforms more likely to be used for sophisticated and high-net-worth investors, her research revealed there were at least six key providers in the space.

She said that not only were the six providers actively vying for clients, but so too were some smaller platform providers and software companies.

McMahon said that while she was not privy to any information about AXA’s new platform, she believed it was extremely unlikely it would ‘provide aggressive competition’ as claimed by the ACCC.

“This is because, regardless of how good it is, planners have myriad reasons for steering clear of new platforms,” she said. “In the last four years most platform growth has virtually stalled. Most platforms lost or gained no more than a few per cent of planners over this timeframe, highlighting the stability and maturity of this market.

“Take, for example, AXA North. It has had around 7 per cent of advisers take it up, and most of them are already aligned to AXA and generally use it for less than one-fifth of their client base,” McMahon said.

The Wealth Insights managing director also took issue with the ACCC’s assertion that in the absence of competitive pressure from AXA’s platform, existing providers were unlikely to have the incentive to drive innovation.

“In my experience, the reverse is true,” she said. “There isn’t a platform provider in the industry that isn’t constantly striving to keep up with, and get ahead of, the rest of the market in terms of service, functionality and software integration.”

She said this was something which was underscored by the number of senior executives who have key performance indicators and bonuses attached to how advisers rated their platforms relative to the competition.