Buy now pay later products will be included in information sharing requirements when the Consumer Data Right is extended to cover non-bank lending.
Treasury has issued a draft designation instrument for consultation, setting out how it will include non-banking lending under CDR. It has called for submissions.
Earlier this year, the government detailed plans to extend the CDR to non-bank lending, merchant acquiring, general insurance and superannuation, which it is calling open finance.
Non-bank lending is the first cab off the rank and the designation instrument includes the classes of information that will be subject to the consumer data right and the “persons” who will be required to make this information available.
The designation is intended to capture information about BNPL products. CDR will cover BNPL providers but not the merchants that offer BNPL.
The designation will cover white label products sold by third parties.
In cases where there are securitisation arrangements, the data sharing obligations will generally apply to loan originators and not the entities providing the funding.
The draft designation instrument envisages that the same kind of data that ADIs make available will be designated. This includes payments, charges, rates, repayment schedules, eligibility criteria, contract terms and conditions, and customer contact details.
Information that is “materially enhanced”, which is subject to analysis of the source material, is not included in information sharing requirements.
One question is how non-banks are to be defined for the purposes of CDR. In open banking ADIs are identified as data holders but there is no equivalent for non-banks that neatly captures the relevant entities.
There are more than 1000 Australian Credit Licence holders and some specialists not required to hold an ACL.
In its consultation earlier this year, the government said: “A key consideration will be striking the right balance between designating a broad scope of data to support product comparisons and the cost of making these datasets available cross the broad spectrum of non-bank lenders participating in the market.”
The draft designation instrument proposes that a threshold of A$50 million of annual financing be included in the CDR rules.
It said: “This would recognise that the introduction of CDR obligations, and associated compliance burden, may have an impact on smaller players and start-ups as they attempt to bring innovative products and business models to market to disrupt the incumbents.”