The government has introduced Consumer Data Right legislation to Parliament for the second time, weeks after the launch of the open banking pilot program.
Treasurer Josh Frydenberg introduced the Consumer Data Right bill, which lays the groundwork for open banking and other industry data sharing schemes, to the House of Representatives on Wednesday morning, with the Coalition planning to quickly pass the legislation within weeks.
But Labor is likely to continue to pursue a series of amendments to the legislation in the Senate with a focus on the privacy and security of the sensitive data.
The legislation will allow for the open banking scheme to kick off early next year, with initial trials launching at the start of July this year.
Mr Frydenberg said the legislation will benefit consumers and providers in multiple sectors, with banking to launch first, followed by energy and telecommunications.
“Improved consumer control over data will support better price comparison services, taking into account peoples’ actual circumstances, and promote more convenient switching between products and providers,” Mr Frydenberg said in a statement.
“Improved access to data will also enable the development of better and more convenient products and services, customised to individuals’ needs. Improved competition and data-driven innovation will support economic growth and create new high value jobs in Australia.”
The open banking scheme will be a big coup for the local fintech sector, allowing it to access lucrative consumer data from the big banks, with permission from the consumer.
Fintech Australia general manager Rebecca Schot-Guppy welcomed the introduction of the CDR bill as a “key milestone in the journey towards open banking”.
“It cements the course towards this new regime, gives the fintech and broader finance industry certainty and allows us to all plan for its introduction,” Ms Schot-Guppy told InnovationAus.com.
“We know the end result of this reform will be transformative, we expect it to empower consumers like never before. But we also know from the UK experience that it will take time and ongoing support to reach that goal.”
The path towards open banking kicked off in July 2017 when then-Treasurer Scott Morrison commissioned a review into the scheme.
It was confirmed in last year’s budget that the government would be pursuing an open banking scheme, with plans to pass the necessary legislation by the end of 2018, with a launch in July this year.
The government opted to introduce broad Consumer Data Right legislation that could be applicable to a range of sectors, not just banking.
But it failed to pass the legislation in the last sitting week of 2018, and just days before Christmas it was announced that the scheme would be delayed by eight months.
Instead of a wider launch, at the start of the month three of the four major banks started to share product data about credit and debit cards, deposit accounts and transaction accounts. In February next year product and consumer data for mortgage accounts will also be made available in the pilot, while the proper open banking scheme is slated to launch no later than February 2021.
The initial CDR legislation was introduced to Parliament in February this year and was referred to the Economics Legislation Committee for a quick inquiry. Despite hearing wide-ranging concerns centred on privacy, consumer protection, sectoral coverage and the rushed process, the committee merely recommended the legislation be passed as it was.
Labor produced a dissenting report echoing many of the concerns heard during the inquiry, and had planned to move a number of amendments to the legislation in the Senate. But it wasn’t brought for debate before the May election, angering many in the fintech sector over the further delay.
The Coalition has now finally put the CDR bill back on the agenda, introducing it in the second sitting week of the new Parliament. While it plans to quickly pass it through both houses, Labor is likely to still pursue a number of amendments in the upper house.