FinTech Australia welcomes direction of reforms proposed in Productivity Commission Draft Report to put consumers in control

Last week, the Productivity Commission released its draft report into Data Availability and Use. The research examines the costs and benefits of unlocking data held by the public and private sector, and of providing consumers with more transparency and control over Data. This in turn empowers consumers to make more informed decisions, and creates a more efficient, competitive business landscape.

The Commission’s draft report has made a number of recommendations that point toward sweeping reforms to Data Availability and Use through the introduction of a new Data Sharing and Release Act. The recommended reforms are designed to shift Australia away from a system based on risk aversion and avoidance, toward one based on transparency and confidence in data processes that befits a forward-thinking Data economy.

FinTech Australia is fully supportive of the Productivity Commission’s and Federal Treasury’s desire to propel Australia toward a new modern mindset adopted by the world’s leading jurisdictions. We welcome the direction of these consumer-oriented reforms, particularly the Comprehensive Right for Consumers which would allow them to direct an institution to share a copy of their data to third parties.

This firmly puts Consumers in Control of their data – which is aligned with the view FinTech Australia has expressed to the Productivity Commission in its submission on Open Financial Data, in its submission to the ACCC regarding Apple NFC, and to the Australian Media. We believe this will increase competition, increase consumer choice, and improve the financial wellbeing of Australians.

FinTech Australia is also fully supportive of the Productivity Commission’s recommendations to enable broad access to key National Interest Datasets (NIDs), especially if data from the ATO and ASIC is made available through the act. FinTech Australia has already outlined the economic benefits this could deliver to Consumers and Industry in its submission.

FinTech Australia also welcomes the recommendation from the Productivity Commission that the market should determine the price for providing access to data under supervision of the ACCC, provided existing Data Aggregators such as Yodlee and Proviso are specifically legitimised to create an effective ceiling on price. This is a very important step to ensure Australia’s emerging fintech industry continues to develop and thrive, and the millions of Australian consumers already benefiting from products that use data aggregation technologies are not subject to interrupted service or sudden adverse fees.

Whilst the recommendations in the draft report are a tremendous step forward, more is needed to ensure the reforms are adopted by Government and Industry in a timeframe that ensures Australia remains competitive with other jurisdictions. We have already seen how the voluntary nature of Australia’s Comprehensive Credit Reporting (CCR) regime has impacted its delivery; according to Veda, there has been less than 25% delivery of CCR in Australia. This is much lower than New Zealand who are already at 50% adoption despite moving toward CCR over a year later than Australia.

FinTech Australia therefore urges the Government to legislate the desired outcomes – namely the implementation of Consumer-directed Data sharing and Controls across agreed NIDs and industry – and establish a clear timeline for achieving them. In this way, each industry player has the freedom to implement the changes in a manner of their choosing, and with consideration of their ability to do so e.g. building Open Banking APIs or by working through third party providers such as Aggregators. As an example, we welcome recommendation 4.1 from the Productivity Commission to legislate mandatory reporting of CCR by 31 December 2017 should the 40% CCR target not be met by 30 June 2017.

We note the Productivity Commission has decided not to recommend the enforcement of banks implementing Open Banking APIs for the effective delivery of Financial Data. FinTech Australia is disappointed in this outcome, as Open Banking APIs are an effective way to empower Consumers to act upon decisions made after sharing their data to third parties. FinTech Australia will continue to work with the Productivity Commission to source and deliver further information from other jurisdictions regarding the costs and benefits of implementing Open Banking APIs.

We understand there is also plenty to be done to ensure the successful execution of this important transformational change in a manner that protects the privacy and security of Australian Consumers. However, we are concerned that Banks and other institutions will use consumer security and privacy as an excuse to pick and choose which third parties they will allow Consumers to share their data with, as one bank has repeatedly done in the past.

FinTech Australia supports the Productivity Commission’s draft recommendation 6.2 that the private sector is best placed to determine sector-specific standards. Urgent steps are needed to develop minimum standards for privacy, security and best practice around sharing of Financial Data so Consumers are not restricted in their choice due to large institutions protecting their own interests.

We look forward to engaging with Consumer and Industry groups on the development of these standards.

FinTech Australia will be holding a roundtable discussion with members to prepare a subsequent submission to the Productivity Commission’s report. We will also begin discussions around minimum standards and safeguards for Privacy and Security around Consumer and Business Financial Data. We invite other Industry and Consumer Groups to contribute their views to our discussion.