The Australian Competition and Consumer Commission (ACCC) has proposed changes to the rules around open banking, creating more pathways for brokers to access customers' underlying data, in an attempt to make the new system more widely adoptable; however, as Jarrid Ohanessian, general manager of illion Open Data Solutions sees it, the suggested amendments come with too many limitations and, as such, the group plans to continue lobbying for change.
“While illion appreciates the ACCC’s efforts to advance open banking in Australia, we feel the latest proposal still lacks the level of access that is needed to reduce the barriers to entry and enable wide use of open banking through the CDR,” Ohanessian explained.
The issue with the Consumer Data Right (CDR) rules as they currently stand is the prohibitive cost of going through the ACCC’s vetting process to become an Accredited Data Recipient (ADR), after which an organisation is deemed secure enough to handle customers’ sensitive financial information.
Ohanessian described the process as “stringent”, with review after review eventually costing interested parties an average of $250,000 to secure their ADR status.
“What that means is it’s really, really hard for a lot of the smaller players in the market to take advantage of open banking data,” he said.
After having consulted with the industry, the ACCC conceded this cost does present a barrier to bringing open banking to the wider market. To address the disconnect, it proposed creating a second tier of ADRs that are not required to invest so heavily in being approved to participate – but also which are not able to access the full range of data otherwise available.
“Including trusted advisors in this tiered accreditation acknowledges brokers do have a need to consume open banking information in order to support their customers…but the restrictions on the use of data for this tier misses the mark somewhat,” said Ohanessian.
“If you’re a broker, it’s critical you understand all the detailed information about your customer, especially with Best Interests Duty coming soon. Brokers require access to full transactional data in order to meet their obligations to customers. They can’t really provide an offering to them or suggest products unless they understand that.”
In its submission to the ACCC around this proposed change, illion called for a “much less prescriptive approach” where a consumer, with consent, can freely enable their data to be used by third parties without such limiting parameters.
“Trusted advisors have a need to access consumers’ banking data, both at the product and transactional level, in order to provide services to their clients,” Ohanessian reiterated.
“CDR data will assist mortgage and finance brokers by allowing for an improved level of data sharing and a more comprehensive view of a consumer’s financial position, allowing them to assist consumers to meet their financial obligations whilst also supporting brokers’ regulatory and compliance obligations.”
Ohanessian emphasised there are currently more than 8,000 brokers using illion’s services, providing the group a clear sense of what industry participants need to thrive.
“We get a lot of feedback from them. We really understand what’s important to brokers, and we want to make sure we’re there to support them through this process,” he said.
illion plans to continue working directly with the ACCC and other relevant parties to ensure open banking is shaped into something that truly gives full control of data to the consumer. As part of this effort, the fintech group plans to push for trusted advisors to be able to access raw transaction data, rather than summarised content alone.
“We strongly argue that the data provided to trusted advisors not be restricted,” Ohanessian said.
As far as illion is concerned, it’s not only the barriers to entry for trusted advisors that need to be reduced, but for the entire financial services industry – if open banking is ever to truly achieve its central goal of empowering consumers, that is.
“Open banking should also be able to be used by lenders, growing fintechs and accountancy firms with minimal barrier to entry, [enabling] consumer benefits through firms being innovative in the market. With the current rules being so restrictive, we are stifling that innovation,” Ohanessian finished.
