The Australian Treasurer, Josh Frydenberg, has outlined a new timetable for the phased implementation of open banking in Australia.
From 1 July 2019, the four largest banks will be required to share specific product data and commence a pilot beta testing program in conjunction with Data61 and the ACCC.
The four largest banks will share consumer data no later than 1 February 2020, if the ACCC is comfortable with the robustness of the system.
Enabling legislation for CDR has still yet to be introduced into Parliament.
Source: Treasurer Media Release
Point of View
The New Timeline – Phased Implementation
On 21 December 2018, the Treasurer articulated a new timeframe for open banking:
The timeframes for other banks and participants is as above plus twelve months. However, if entities wish to participate earlier they can.
The major point of difference here is that the 1 July is no longer the start of consumer data sharing. Instead the ACCC and Data 61 will launch a pilot beta testing program with the four major banks to test the performance, reliability and security of system. Consumers and FinTechs will be invited to participate in these pilots and the ACCC and Data61 will also work closely with other banks who have expressed an interest in participating in Open Banking earlier than originally envisaged. In the meantime the Government agencies continue on progressing the legislation, rules and standards
A draft of the legislation (Treasury Laws Amendment (Consumer Data Right) Bill 2018) was released in December, with an explanatory memondraum. The Primary legislation allows for CDR to be established, and will give legal force to the standards and rules. A ‘designation instrument’ will allow the Treasurer apply CDR to a given certain sector of the economy, such as banking, energy or telecoms.
ACCC continues to refine the Rules, that describe what the application of CDR to that sector would look like. Version 1 of the Rules Framework was released in September 2018, indicating that it would not address all the potential, but would focus on those essential to start open banking. In the Rules Outline, released in December, sets out the ACCC’s current position which are expected to be published for consultation in the first quarter of 2019. The Rules Outline is intended to provide guidance to stakeholders, including designated data holders, potential data recipients and consumers, on what the rules will require of CDR participants.
Finally, Data61 continues to progres work on the Standards across the three workstreams of API Standards, Information Security and Consumer Experience. In December Data61 released an working update, summarising the progress made to date and next steps for 2019.
The change in date from 1 July 2019, is not entirely unexpected. Many of the submissions to the Open Banking Review, stakeholders flagged that it would be difficult to achieve the proposed start date for sharing consumer data. Over the past few months, it looked like there may be a shift as to what this date actually would mean. Indications from the ACCC and Data61 in developing the Rules and Standards, made references to minimum viable product (MVP) and focus on version one of the Rules, that could be built on and refined over time as CDR developed. The new timeframe therefore represents a more realistic pathway to a robust and effective system that supports consumer choice, while protecting their data and privacy.
A draft of the legislation was originally planned to be introduced in parliament in the first two sitting weeks in December 2018. The parliamentary calendar in the end did not allow for this to happen as the final sitting time was taken up by the Encrytption Bill. With an election due in May 2019, the delay in introduction of the CDR legislation has the potential to complicate the implementation of CDR. Without primary legislation, much of CDR implementation and developments are based on goodwill. The ACCC doesn’t have the official power to write the Rules and the Treasurer cannot designate any sector to comply with CDR.
Parliament already has a light sitting calendar for the first half of 2019. In the first four months of the year, Parliament is only in session for four weeks. Compounding this, the 2019-20 Budget is due to be delivered in April, meaning that some of the already limited time will be taken up by budget debates. It is also likely that, in accordance with its usual practice, the Senate will refer the Bill to a committee inquiry.
This could mean that there will be limited time for Parliamentary consideration of the legislation prior to the election, and that there is increased risk that Parliament time could be consumed or overtaken by other political events. This may mean that the legislation is not dealt with until after the election.