Australia has moved one step closer to implementing an Open Banking regime with the publication of a final Government report into the issue, accompanied by draft legislation to mandate comprehensive credit reporting.
Commissioned in July last year, the report makes 50 recommendations, on the regulatory framework, the type of banking data in scope, privacy and security safeguards for banking customers, the data transfer mechanism and implementation issues.
In issuing the report, the Government is calling on stakeholders to have a final say before making full decision on implementation, setting a deadline of 23 March for further feedback.
The report is released in conjunction with Government proposals to develop a national 'Consumer Data Right', which will be informed by the recommendations in the Open Banking Review. The CDR will give customers the right to access their data in a machine-readable form.
The Government has decided that the CDR will be implemented economy-wide on a sector-by-sector basis, initially in the banking, energy, and telecommunications sectors. Open Banking - the CDR for banking data - will be the first sector in which the right will be established.
The Government has additionally published draft legislation which will require the major banks to supply 50% of their comprehensive credit reporting data to credit reporting bodies by 1 July 2018, increasing to 100% a year later. The rules are expected to open up the lending market to competition by allowing new entrants to sift through the data to better assess credit risk.
Australian treasurer Scott Morrison says: "The Bill is a game changer for consumers - leading to better deals on mortgages, personal loans and small businesses loans. Customers with good credit histories will be able to obtain lower rates, and be better placed to shop around because their credit history will now become available to all lenders. Others, whose previous credit histories only included default rates, will also get a better chance to demonstrate their credit worthiness because there will be more credit information available on their reliability."
The package of measures has been welcomed by fintech industry lobbies.
“An open banking regime is key to giving consumers more choice of financial services providers, a greater understanding of their financial standing and overall more control over their financial future,” says FinTech Australia chair Stuart Stoyan. “It is also vital to supporting greater fintech innovation - which creates increased competition, greater choice, more efficient delivery and lower price of financial services for consumers.”
Stoyan also pointed out that a regulated open data regime would allow fintech firms, and Australia’s financial services industry, to compete against global tech players. “Without access to the financial data necessary to build, test and deploy innovative fintech solutions in their local market, Australian companies stand little chance of being able to compete on an increasingly global stage against these digital juggernauts. The net outcome of this is that increasing amounts of our tax revenue, and best skilled labour will go offshore.”