We last summarised regulatory changes for financial and regulatory technology (fintech and regtech) in February.[1] Since then there have been a bunch of exciting developments including the Inaugural RegTech Association’s #ACCELERATERegTech 2018 event[2] and the regulatory approval of a new challenger bank in Australia.[3] We summarise some of the other important developments over the last few months below.
Photo by Samuel Ferrara on Unsplash
By Dr Drew Donnelly, Regulatory Specialist, Compliance Quarter
Open Banking Review and the Consumer Data Right
We mentioned in our February update that Treasury was consulting on the final recommendations of the Open Banking Review. The submissions that were received can be viewed at https://treasury.gov.au/consultation/c2018-t247313/. In response to both the Open Banking Review and the Productivity Commission’s Inquiry Report Data Availability and Use, the Commonwealth Government has announced that a new consumer data right will be established, with banking being the first sector required to implement the new right.[4] The new data right should open up business opportunities for fintech innovators who can access customer transaction and account data (with the customer’s consent) to develop innovative and competitive products.
On the 9th of May, a helpful Consumer Data Right Booklet was released providing further information as to how this will be implemented.[5] This booklet sets out that the data sets in the banking sector will initially relate to a range of both deposit and lending products. It also out a proposed timeline for implementing the data right in the banking sector:
- The four 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;
- Consumer data on all products recommended by the Open Banking Review will be available by 1 July 2020. All remaining banks will be required to implement Open Banking with an extra 12 months for each of the dates set for the four major banks.
The Australian Competition and Consumer Commission (ACCC) in consultation with the Office of the Australian Information Commissioner will develop draft rules for Open Banking setting out how this right will be implemented in greater detail.[6]
Regulatory Sandbox
The bill which will extend the regulatory sandbox for innovative fintech providers (i.e. relaxing the usual licensing requirements for fintech providers under certain specified circumstances) continues to work its way through Parliament. It was considered by the Senate Economics Committee, which heard submissions and released its report on the bill on the 15th of March.[7] Notable in this report are the remarks of Labor Senators who, while generally supportive of the Bill, argued that potential users of the sandbox should be first screened by the Australian Securities & Investments Commission (ASIC) in order to ensure that consumers are adequately protected.[8]
Australia-United Kingdom FinTech Bridge
This enhanced co-operation and collaboration agreement between the UK’s Financial Conduct Authority and ASIC (announced on the 23rd of March), is designed to achieve a quicker licensing process for the authorisation of innovative businesses that are already authorised in the other jurisdiction. Where a business is a participant in either regulator’s regulatory sandbox and would like to enter the other’s, ASIC and the FCA will endeavour to facilitate that participation.[9]
NSW Government commitment to home loan fintech
NSW Deputy Premier and Minister for Small Business John Barilaro announced last week that the NSW Government is backing fintech with a $700,000 loan from Jobs for NSW to HashChing, a home loan fintech. The loan is aimed at supporting that business to create 46 jobs over the next five years.[10]
Australia Centre for Financial Studies Reports
A range of commissioned academic papers analysing fintech in Australia have been released over the last month, including:
- ‘Is Australia ready for a fintech future?’ by Kevin Davis;
- ‘Funding Australia’s future – fintech’ by David Link, Deborah Cope, John Vaz, Kevin Davis, Kym Brown and Rodney Maddock;
- ‘A framework for understanding fintech and its value’ by David Link;
- ‘International competition policy and regulation of financial services – lessons for australian fintech’ by Deborah Cope;
- ‘Innovation and fintech policy: post-murray developments’ by Kevin Davis;
- ‘Cryptocurrencies, institutions and trust’ by John Vaz and Kym Brown.
The papers are available at https://australiancentre.com.au/.
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[1] See https://www.compliancequarter.com.au/february-fintech-roundup-open-banking-review-fintech-lending-smes/.
[2] See https://www.regtech.org.au/page-18082.
[3] See https://www.compliancequarter.com.au/are-challenger-banks-about-to-succeed-in-australia/.
[4] For further information see https://www.compliancequarter.com.au/government-confirms-new-framework-for-data-availability-and-use/.
[5] Available at https://static.treasury.gov.au/uploads/sites/1/2018/05/t286983_consumer-data-right-booklet.pdf.
[6] See Consumer Data Right Booklet, p8.
[7] See https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/TLAB2018/Report.
[8] See pages 15-16 of the Report.
[9] For further details see http://asic.gov.au/about-asic/media-centre/find-a-media-release/2018-releases/18-083mr-british-and-australian-regulators-strengthen-cooperation-on-fintech-through-enhanced-cooperation-agreement/.
[10] For more information see https://www.industry.nsw.gov.au/media/media-releases/2018-media-releases/nsw-government-backs-hashching-with-$700,000-loan.
