In the 2017-18 Budget the Treasurer announced that Open Banking would be introduced in Australia and commissioned an Open Banking Review — chaired by Mr Scott Farrell (Farrell Review) — to make recommendations to the Government on the most appropriate model and the best approach to implement it. The final report was released for public comment on the review recommendations on 9 February (see: Governance News 12/02/2018).

On 9 May 2018, the Government agreed to the recommendations of the Farrell Review, both for the framework of the overarching Consumer Data Right (CDR) and for the application of the right to Open Banking, with a phased implementation from July 2019.

Application

All entities holding banking licences (authorised deposit-taking institutions), other than foreign bank branches, will be subject to the CDR.

Phased implementation

• All major banks will make data available on credit and debit card, deposit and transaction accounts by 1 July 2019 and mortgages by 1 February 2020.
• Data on all products recommended by the Review will be available by 1 July 2020.
• All remaining banks will be required to implement Open Banking with a 12 month delay on timelines compared to the major banks.
• The Australian Competition and Consumer Commission (ACCC) will be empowered to adjust timeframes if necessary.

Draft legislation, rules and standards to be released for consultation

• The Treasury will be consulting on draft legislation, the ACCC will be consulting on draft rules, and Data61 will be consulting on technical standards over the coming months.

Application to other sectors

• The government has announced the first three sectors to which the right will apply – banking, energy and telecommunications and that further sectors will follow over time.

• The government notes that other sectors should not assume all of the recommendations for how the Consumer Data Right will apply to banking will necessarily be adopted for other sectors. For example, rules regarding how consumer identities are authenticated might differ between sectors.

Additional funding announced to establish the CDR

The Federal Budget 2018-2019 includes the announcement that the government intends to provide $44.6 million over four years from 2018-19 (including $1.4 million in capital funding in 2018-19) to help implement establish a national consumer data right (CDR).

This measure will include:

• $20.2 million over four years from 2018-19 for the Australian Competition and Consumer Commission (ACCC) to assist in determining the costs and benefits of designating sectors that will be subject to the CDR, and to develop and implement rules to govern the data right and the content of data standards.

• $12.9 million over four years from 2018-19 for the Office of the Australian Information Commissioner to assess the privacy impact of designating sectors subject to the CDR, and to ensure consistency of rule-making with the Privacy Act 1988

• $11.5 million over four years from 2018-19 to support the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in its role as the data standards setter.

The ACCC has issued a statement welcoming the initiative: 'The introduction of a consumer data right in Australia is a fundamental competition and consumer reform. The ACCC is delighted to lead the data right and to work in the best interest of consumers' ACCC Chair Rod Sims said.

Industry has welcomed the announcement

• The Australian Banking Association (ABA) has also welcomed the initiative: 'The ABA welcomes the Government's announcement on Open Banking which charts the way forward for this important reform which will empower customers…The industry is pleased that the Government has outlined a phased introduction that enables it to design a good system the will both benefit customers and protect their data…Banks are committed to delivering this reform within the tight timeframe and are looking forward to seeing further details contained in the draft legislation as soon as possible' ABA CEO Anna Bligh said.

[Note: The ABA released its response to the Farrell Report Recommendations on 26/3/2018. The response included feedback that customers would benefit from a phased approach to the roll out of the changes (which appears to be reflected in the government's plan) and is acknowledged in Ms Bligh's statement above. The timeframe for implementation however, was not extended in line with the ABA request. See: Governance News 03/04/2018]

• FinTech Australia issued a statement welcoming the initiative stating that 'Australia's fintech industry has welcomed an Australian Government decision to put the customer first by pushing back against big bank delaying tactics and introducing open banking reforms from mid-next year'. The statement adds that the changes are 'expected to force downward pressure on lending costs, allow people to more easily manage their budget and be able to shop around for the best investments' as well as enable customers to more easily switch 'their bank accounts to new fintech challenger banks'. Commenting on the phased approach to providing access to some forms of data, FinTech Australia welcomed the inclusion of specific timeframes for the roll out stating: 'We are pleased that the Australian Government has stood up to the big banks, which wanted to delay this reform into the never-never and significantly reduce the amount of data consumers could access'.

• Westpac CEO Brian Hartzer is quoted in The AFR as welcoming the initiative as an opportunity for his own organisation and as delivering benefit to consumers. He also emphasised that the design of privacy and security safeguards would be of paramount importance.

• National Australia Bank (NAB) Chief Operating Officer Antony Cahill is quoted in The AFR as saying that the 'focus must be on ensuring this change is implemented in an appropriate manner and that speed isn't prioritised over safety; this is critical to ensuring the long term success of the regime and maintaining customer trust'.