The government faces a challenge identifying the non-banks that will be designated as data holders when it extends the Consumer Data Right to include open finance.
The Minister for Financial Services and the Digital Economy, Jane Hume, issued a consultation paper yesterday setting out the government’s plan to extend the CDR to non-bank lending, merchant acquiring, general insurance and superannuation, which it is calling open finance.
The issues raised in the paper include the non-bank lending datasets that should be included in the open finance designation and the non-bank data holders that should be designated (the other groups will be dealt with in later consultation).
The government said it is looking for feedback on datasets that would support product innovation, streamline business processes and improve consumer outcomes.
The consultation paper envisages that the same kind of data that ADIs make available would be designated. This includes payments, charges, rates, repayment schedules, contract terms and conditions, and customer contact details.
It would apply to personal and business credit and charge card accounts, home loans, personal loans, business finance, investment loans, line of credit facilities, asset finance and consumer leases.
One tough question for the government is how to define non-banks for the purposes of CDR. The consultation paper said: “In open banking ADIs were identified as data holders. There is no equivalent for non-banks that neatly captures the relevant entities. A key issue for consideration in the assessment process is the scope of data holders that should be designated.”
There are more than 1000 Australian Credit Licence holders and some specialists not required to hold an ACL.
“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.”
It may set a business activity threshold and wants to know where that might be set.
The government’s move to extend CDR to open finance is a recognition that the current open banking regime does not provide enough data to enable the innovation and competition the system is designed to facilitate.
It wants as much data in the system as possible but also recognises that some lenders are very small, highly specialised and are not supported by sophisticated tech systems.