The Australian Competition and Consumer Commission’s plan for regulating the activities of data intermediaries in the open banking market, and under the broader consumer data right regime, has been criticised for being too rigid and too narrow.
The ACCC has issued a draft for consultation, setting out its proposed rules for the participation of third parties that collect data under the consumer data right regime on behalf of other accredited data recipients.
Under open banking (the first manifestation of the consumer data right), consumers will have the right to direct their bank to share their data with an accredited data recipient.Typical accredited data recipients would include comparison sites, banks, non-bank financial institutions, providers of consumer finance apps and service providers such a travel companies that may track and categorise travel spending.Similar to an outsourcing agreement, the ACCC envisages intermediaries operating under a “combined accreditation person (CAP) arrangement”.
Its proposed rules authorise third parties who are accredited at the unrestricted level to collect data on behalf of another entity that is also accredited at the unrestricted level.
“This will allow accredited persons to rely on other accredited persons in the CDR ecosystem to collect CDR data and to provide other services that will facilitate the provision of goods and services to consumers,” the ACCC says.
Executive director and chief technology officer of fintech Moneytree, Ross Sharrott, says the requirement for all parties to be accredited will be a problem for some small players in the financial services market.
Moneytree, which entered the Australian market in 2017, offers data aggregation and personal financial management services. It plans to be a data intermediary in the Australian open banking market.
Sharrott says Moneytree provides an intermediary service in Japan, where open banking is operating. In the Japanese market there is no requirement for all parties to be accredited and this allows small players to get involved without the cost and administrative complexity of going through accreditation.
To be an accredited person, an entity will have to satisfy the Data Recipient Accreditor that they are fit and proper.
“Data intermediaries are already a central element of open banking systems overseas. In the United Kingdom, companies that wish to use data can become an ‘agent’ of a full accredited recipient without having to do the costly and time-consuming steps of building, testing and getting their own systems accredited,” Sharrott says.
Another of the ACCC’s proposed rules is that the CAP arrangement is a one-to-one agreement, so that the data an intermediary collects for one accredited data recipient cannot be provided to another.
Sharrott says this is an unnecessary restriction on data intermediaries. He said it would also slow development of the system.