Australia gets serious about Fintech
New Committee eyes reforms
08 October 2019
On 11 September 2019, the Australian Senate resolved to establish a Select Committee on Financial and Regulatory Technology to examine issues including "open banking" and opening up access to the real-time payment system to start-ups working in this space.
The Committee will comprise six senators and is expected to be chaired by Senator Andrew Bragg and will inquire and report on, amongst other things:
- the size and scope of the opportunity for Australian consumers and business arising from financial technology (FinTech) and regulatory technology (RegTech);
- barriers to the uptake of new technologies in the financial sector;
- the progress of FinTech facilitation reform and the benchmarking of comparable global regimes;
- current RegTech practices and the opportunities for the RegTech industry to strengthen compliance but also reduce costs; and
- the effectiveness of current initiatives in promoting a positive environment for FinTech and RegTech start-ups.
It has been reported that, as part of the government's work toward improving financial sector competition through its ''consumer data right'' (CDR), the Committee is expected to work with major banks, start-ups and potentially global technology players. It is anticipated that the Committee may look to other jurisdictions with well co-ordinated data policy bureaucracies such as Singapore to identify opportunities to enhance regulation of consumer data. The Committee is expected to consider how banks are leveraging technology to improve compliance in the wake of the recently concluded Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The Committee is expected to present its final report before the first sitting of the Senate in October 2020.
Consumer Data Right
On 26 November 2017, the Australian Government announced the introduction of a CDR which is intended to improve consumers’ ability to compare and switch between regulated products and services. The CDR is also designed to improve competition in regulated sectors and lead to better prices for customers and more innovative products and services.
By enacting the Treasury Laws Amendment (Consumer Data Right) Act 2019 (assented to 12 August 2019), the government has determined that the CDR will first apply to the banking sector, followed by the energy and telecommunications sectors (link to the explanatory memorandum).
Open banking is being implemented in phases and since July 2019 banks have been testing and voluntarily providing access to certain product data. By February 2021, the big four banks will be required to provide access to consumer, account and transaction data with all other banks to follow suit within 12 months.
Taking Fintech and Regtech Seriously
By establishing the Committee, the government is demonstrating that it recognises the important role Fintech and Regtech will play in the future of regulation, compliance, the banking industry and the Australian economy.
The nature of the reforms expected to be considered by the Committee (i.e. the CDR and open banking) represent encouraging steps toward providing greater competition and choice for consumers and an enhanced market and regulatory environment for businesses. However, along with the opportunities, such reforms will also bring uncertain challenges to established businesses, trying to stay competitive and compliant, and to start-ups and new entrants trying to break into the market.
If Australia stays serious about Fintech and Regtech, we can count on further reform of the financial sector.
Written by Andrew Kish, Law Graduate, Clifford Chance