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The Australian government has launched a consultation on the new rules that aim to expand the consumer data right to non-bank lenders.
The consumer data right (CDR) first rolled out across the banking sector in July 2020 to give consumers greater access to and control over their data.
It first began with the big banks before making non-majors able to share information about certain products.
Treasury has recommended that the CDR now be extended beyond banking, energy and telecommunications to include the non-bank lending sector.
The proposed extension of the CDR forms part of a new focus on “open finance” that is also set to include the merchant acquiring, general insurance and superannuation sectors.
Assistant Treasurer Stephen Jones said: “With the independent Reserve Bank raising interest rates to respond to inflation, there has never been a better time to apply the Consumer Data Right to our loans sector.
“Borrowers will be able to use their own data to properly compare loan offerings and decide on the best one for them. This will keep lenders on the ball as well as lowering processing costs if a customer decides to change providers.”
The government has said it had received advice that suggested extending the CDR would result in lower barriers for borrowers switching lenders and lead to greater competitive tension.
“The Albanese Government believes better-informed consumers and more transparent markets will drive innovation and competition,” the Treasury outlined.
"Combining CDR in the non-bank lending sector with other Open Banking initiatives will give consumers a better understanding of their financial position, further empowering their choices."
Consultation on a draft designation instrument that would extend the CDR to non-bank lending is now open and is set to run until 16 September.
The government is seeking feedback on the draft designation instrument, which sets out the scope of datasets and data holders proposed to be designated in the non‑bank lending sector, before the Minister makes a final decision.
A number of consumer groups had previously raised concerns around Treasury’s push to extend the open banking regime to non-bank lenders, claiming it will support predatory behaviour.
The Financial Rights Legal Centre, Financial Counselling Australia and Consumer Action Law Centre have published their joint submission to Treasury’s consultation on its proposed expansion of the consumer data regime (CDR), also referred to as open banking, to non-bank lenders.
The consumer bodies admitted there will be benefits from allowing non-banks to access open banking data, including improving the accuracy of lenders’ responsible lending checks and assisting the other CDR participants, such as insurers, to improve their processes.
[Related: Non-banks could abuse open banking say consumer groups]
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