The Turnbull Government will act to improve customer outcomes and increase competition in the financial sector by implementing the recommendations in the final report of its independent Review into Open Banking.
Implementation will be phased in from July 2019, paving the way for the introduction of the Government’s Consumer Data Right in the banking sector.
Open Banking has the potential to transform the competitive landscape in financial services and the way in which Australians interact with the banking system.
It will give banking customers greater access to the data their banks hold on them and the ability to direct that it be safely transferred to trusted and accredited service providers of their choice.
Customers will be able to use their new data rights to find better deals on their credit cards, mortgages and other banking products. Comparison services will be better able to assess the value and suitability of all available products, taking into account the individual circumstances and needs of the customer. This will help to break down barriers that see customers staying with their banks even when there are better deals elsewhere.
Open Banking will also allow entrepreneurs to develop new services and products tailored to customers’ needs, disrupting those existing business models within the banking sector that do not put customers first.
Importantly, the Government has committed to the blueprint proposed by the Review for ensuring strong privacy protections and information security for customers’ banking data. A key element of these protections is that only trusted and accredited recipients will be permitted to access data, only with customers’ express consent and only for the purposes the customer has expressly permitted.
The Government has set a challenging but realistic timeframe for bringing the benefits of the Open Banking reforms to consumers, with a July 2019 commencement.
Open Banking will be phased in with the aim that all major banks will make data available on credit and debit card, deposit and transaction accounts by 1 July 2019 and mortgages by 1 February 2020. Data on all products recommended by the Review will be available by 1 July 2020. All remaining banks will be required to implement Open Banking with a 12-month delay on timelines compared to the major banks. The Australian Competition and Consumer Commission (ACCC) will be empowered to adjust timeframes if necessary.
The ACCC will be responsible for promoting competition and customer-focussed outcomes within the system, while the Office of the Australian Information Commissioner (OAIC) will ensure that privacy protection is a fundamental feature of the system.
Data61, the data arm of the CSIRO, will be appointed to perform the role of a Data Standards Body, developing technical standards for the system in collaboration with industry, FinTechs, and consumer and privacy groups.
Open Banking will be implemented as part of the Consumer Data Right in Australia, a more general right to data established by the Turnbull Government currently being created across the economy following a recommendation by the Productivity Commission’s Data Availability and Use Inquiry. The Consumer Data Right will be established sector-by-sector, beginning in the banking, energy and telecommunications sectors.
Further information about how Australians can benefit from Open Banking and the Consumer Data Right can also be found in the attached handout. For more information visit the Consumer Data Right page on the Treasury website.