ACCC to delay open banking laws

The competition regulator will temporarily delay the implementation of new data laws for the financial sector.

The open banking laws are aimed at giving consumers greater access to and control over their data.

Financial services firms have been granted a temporary exemption from having to comply with new open banking laws, as the sector faces the impact of the coronavirus pandemic.

The Australian Competition and Consumer Commission (ACCC) will provide a three-month exemption to firms needing to comply with new laws set to come into full effect on July 1.

Consumer data right (CDR) – commonly referred to as open banking – is aimed at giving

consumers greater access to and control over their data, helping them to switch between products and services.

CDR will require financial companies to gain consumer consent before sharing product and customer information with third parties.

Businesses still needing to comply with regulatory changes will have until October 1 to do so.

Major banks have been adopting open banking since as early as July 2019, with the entire industry initially needing to align with the new laws by the start of the coming financial year.

ACCC commissioner Sarah Court noted the decision made by the regulator followed increased pressure on Australia’s financial framework because of COVID-19.

“The ACCC is granting these exemptions as an acknowledgment of the intense resource requirements of the industry as a result of the COVID-19 pandemic, and in particular non-major banks that may not be able to prioritise this at this time,” Ms Court said.

“We understand that financial providers are dedicating many resources at present to support their customers, however we do encourage providers to share product reference information on a voluntary basis if they are in a position to do so.”

Commonwealth Bank in March flagged that the full implementation of the regime would be challenging, given the economic fallout caused by the pandemic.

The Australian Financial Industry Association has welcomed the delay, saying it will give smaller financial lenders time to adjust and develop systems to share product reference data.

“The open banking regime is about promoting innovation in financial services and competition in the lending market, so it’s really important for smaller lenders to be able to participate as soon as possible,” AFIA chief executive, Diane Tate said.

“The COVID-19 crisis has diverted resources away from product and technology development, with smaller lenders focused on managing the significant increase in customer contact and helping their customers through the crisis.”

AFIA previously urged the government to look at temporary delays to the rollout of open-banking in order to factor in the operating disruption caused by the virus.

In its submission to a fintech senate inquiry on April 10, the industry association noted financial companies should be allowed to continually use screen scraping technologies in the interim, to gather data information.

The exemptions will apply to all non-major authorised major deposit-taking institutions, including small banks, building societies, credit unions and non-primary branded products owned by major banks.

The Australian Banking Association was contacted for comment.