Open banking’s politics of delay
Consumer Data Right
Ed Husic: Delays to the CDR present an opoprtunity to improve the legislation
The government’s inability to introduce its “game-changing” Consumer Data Right legislation, and the subsequent delay to the launch of open banking, could provide an opportunity to improve the regime, according to the Opposition.
The government had planned to introduce the Treasury Laws Amendment (Consumer Data Right) Bill 2018 to the House of Representatives during the last sitting week of the year in December, where it would have been immediately referred for inquiry to report back by March.
But government was unable to introduce the legislation as it fought to avoid an embarrassing defeat in the lower house – effectively losing control of the parliamentary agenda in the final days of the 2018 sitting year – leading to farcical scenes that saw the House of Representatives adjourned as early as possible.
The legislation would pave the way for the launch of open banking, with the Consumer Data Right framework to also be applied later to the energy and telecommunications sector.
Shadow digital economy spokesman Ed Husic said it was disappointing the legislation had not been introduced to Parliament in the end.
“They couldn’t get their act together in a legislative sense. This was a bill they told us was really important, but it got tangled up in their inability to get their legislative priorities right,” Mr Husic told InnovationAus.com.
It was surprising given they had made a big deal that they had wanted to bring the legislation in this year,” he said.
“In a way the tripping over themselves that occurred in the last week of Parliament prevented them from bringing in a bill that was so important.”
The Consumer Data Right bill, which facilitates the launch of open banking, is still yet to be introduced to Parliament, and with few sitting days left before a probable May election, it appears unlikely that it will be passed before a potential change in government.
After Parliament rose for the last time of the year, the government quietly announced that the open banking scheme would be delayed by eight months.
While it had earlier been planned to kick off in July this year, that date will now mark the launch of a testing period, with the proper launch taking place no later than February 2020.
According to Treasurer Josh Frydenberg, this delay was not the result of an inability to introduce the necessary legislation, but rather an effort to ensure the proper security and privacy protections are in place for the scheme.
“The legislation has been released and the government intends to introduce it into the Parliament early this year,” Mr Frydenberg told InnovationAus.com in a statement.
"In implementing the Consumer Data Right, the government is committed to ensuring that the security and privacy of consumers’ data is paramount,” he said.
“To ensure the long-term success of the regime and to provide comfort to the community regarding the robustness of the system, a phased implementation has been adopted."
Mr Husic said that while the delay was disappointing, it presented an opportunity for many of the concerns raised by various stakeholders to be addressed,
“The one thing they managed to do was unite business and consumer groups alike with concern about the shape of the bill. There are some big issues to tackle in this,” he said.
”Besides privacy and security, there’s the arm wrestle around derived data, and the interplay between the legislation, rules framework and data standards.”
“There is a lot of ground to cover with this reform, and people underestimate the complexity of it.”
Once the legislation is introduced to Parliament, it would be immediately referred to the Economics Legislation Committee for inquiry, with a focus on the consequences of the proposed data framework, how it will interact with other legislation.
There were “significant stakeholder concerns about aspects of the bill in relation to data access, small business cyber capabilities, the level of informed consumer consent, appropriate powers with regulators and potential data-related fees”.
“Labor had argued the case with Senators that given the breadth of what was proposed it would need a longer inquiry,” Mr Husic said.
“[This was] being mindful that a lot of the stakeholders felt like their views hadn’t been taken into account, and from our perspective an inquiry would flush out those concerns,” he said.
“It’s good that the government has considered that and agreed to additional consultation, and overall we think this reform’s time has come. While the opportunities are significant, the risks of getting this wrong are significant. We want them to get it right.”
Labor will work with the government to pass the legislation as quickly as possible while addressing the array of concerns in order to avoid any further delays to the rollout of open banking, Mr Husic said.
“The other big challenge, particularly for our friends in the FinTech community, is to be able to demonstrate that open banking is not going to be something that solely benefits high net worth individuals. This really needs to be a reform that can help the average mum and dad consumers as well,” Mr Husic said.
Mr Frydenberg said open banking will benefit all Australians.
“Increasing competition in the banking sector to give consumers more choice, lower prices and better service is part of the Coalition government’s plan for a stronger economy,” said.
“The Consumer Data Right, with the banking sector being the first to roll out the initiative, will be a game changer when it comes to how consumers leverage their data to obtain more tailored products and services and have more information to make better choices.”