Posted: 20 Dec. 2019 6 min. read

Changes to the start date for open banking

Déjà vu all over again?

The Australian Competition and Consumer Commission (ACCC) announced in December 2019 that the start date for sharing of customer and transaction data as part of open banking in Australia has been delayed to July 2020.   These changes are not a surprise.  The absence of the start of the consumer education process was an early warning sign that the February 2020 date would not be met.

What is somewhat surprising is the length of the delay, another five months. This is now the second delay, the first was a seven-month delay from 1 July 2019 to 1 February 2020, and puts the start date for sharing customer and transaction data a year behind the original schedule.  The only element of the original schedule that has been met is the release of product reference data by the four major banks from 1 July 2019, but even this was voluntary, and was only able to be done by three of the four banks.

Under the re-revised open banking implementation timeline, which will be reflected in changes to the CDR Rules in January 2020, the four major banks’ obligation to share consumer account and transaction data will change to:

  • 1 July 2020 for credit and debit cards, deposit accounts and transaction accounts
  • 1 November 2020 for mortgage and personal loan accounts

The four major banks will continue to be required to share product reference data from 1 February 2020 for credit and debit cards, deposit accounts and transaction accounts as well as mortgage and personal loan accounts. All other banks be required to share product reference data for credit and debit cards, deposit accounts and transaction accounts from 1 July 2020.

Is this a good thing or a bad thing?  The answer is probably both.

The Treasury had undertaken an independent review of CDR implementation in October 2019.  It is likely that the decision to further delay the start date reflects feedback from banks and the regulator about the challenges in meeting the February 2020 timeline.

Given Australia is implementing an economy wide consumer data right, it is important that we get the design for the first sector, banking, right. If we don’t, we potentially undermine consumer confidence in data sharing and jeopardise the implementation of CDR across a range of sectors.

In its announcement, the ACCC noted that “it will not be possible to complete sufficient testing for a February 2020 launch” and added “It is best to get the build of the system right and take steps to have confidence in its secure operation.”[1]

There is some merit in these arguments. In our submission on the Consumer Data Right (CDR) legislation we had noted that:

It is important to acknowledge that the implementation of open data is not without risks.

The increase in:

  • the amount of consumer data that is shared; and
  • the number of counter-parties with which this data is shared; where the consumer data is:
  • sourced from systems that were not necessarily built with consumer data sharing in mind; and
  • shared via a new regulatory environment which introduces new obligations on data holders and authorised data recipients; with
  • the first sector in which open data is implemented being one with high risk information; together create a risk of unintended, and potentially unanticipated, adverse consequences.

The design of the rules and accreditation process for the CDR is a new activity for the ACCC.  In addition, organisations will need sufficient time after the publication of the rules to make changes to their systems in order to be able to meet their obligations as a data holder or as an accredited data recipient.

However, the CDR was intended to promote innovation and the delivery of value for consumers, and greater competition.  Challenger banks (and there have been a number that have started in the last 12 months or so) will be disappointed in a further delay to the start of data sharing, as the ability to access customer transaction data is an important enabler to the value they deliver to consumers.

The second delay in less than a year could suggest that both the government and the banks, have failed to allocate sufficient resources to ensure that the original regulatory timetable could be met.  For the banks, this is not the first time, with delays to the start of two other legislative changes - Comprehensive Credit Reporting (CCR) and the New Payments Platform (NPP).  In a more challenging operating environment, and one in which banks are facing significant regulatory remediation costs, the delay in CDR could be seen to reward the inadequate resource allocation by all parties.

Visit our open banking website to read more on preparing for the changes.

 

[1] Australian Competition and Consumer Commission, Update to CDR timeline announced, 20 December 2019

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