Response to non-bank lending draft designation instrument for the Consumer Data Right

September 2022: In response to the non-bank lending draft designation instrument for the Consumer Data Right, Finder prepared the following submission. Visit our government submissions hub for more Finder submissions to government consultations and inquiries.

About Finder

Finder.com.au ("Finder", "we") is a global fintech based in Australia. One of our key products is our free financial comparison site which helps consumers compare products in over 50 product categories, including credit cards, home loans, savings accounts, energy plans, broadband plans and insurance products. Pertinent to this consultation, we also compare non-bank home and personal loan lending products. Our purpose is to help people make better decisions. Our guides, calculators and comparison tables enable better decision-making across a range of complex products and services.

Our views on the Consumer Data Right

Finder continues to be very supportive of the Consumer Data Right (CDR) that empowers Australians to take control of their personal data and use it to make better financial decisions. We are already an active participant in the CDR regime as both an unrestricted accredited data recipient for the banking sector and through providing a representative to the CDR Data Standards Body Advisory Committee for over two years.

Broadly, we welcome the designation of the non-bank lending sector for inclusion in the CDR. This is a valuable sector that offers complimentary datasets to the existing banking designation. However, we would like to point the Treasury CDR sectoral assessment team toward our response to the CDR strategic assessment for our rationale as to why we think the general insurance sector should be the next designated sector.

Response to the non-bank lending designation instrument

As raised in our previous submission to the sectoral assessment for the non-bank lending sector, there are some nuances regarding product data in the lending sector.

First, when applying for credit products, not all consumers will be approved. This means the approval criteria or eligibility criteria for the products in this sector are particularly important. Failed credit applications can have a detrimental impact on a consumer's credit score so this information is crucial to enable better financial decision-making. A reference is made to "the eligibility criteria a person must meet in order to acquire or use the product" in Section 9 of the Designation Instrument. However, a customer may be eligible for a product but still not be approved when they apply. For this reason, we would like to see the Designation Instrument explicitly reference approval criteria in Section 9 as well as eligibility criteria.

Second, and linked to the above point, risk-based pricing is particularly prevalent in the non-bank lending sector. This is the practice of offering consumers different prices based on how risky the lender deems the borrower to be. Generally, higher-risk customers will be offered a higher interest rate and lower-risk customers will be offered a lower interest rate. Section 9 of the Designation Instrument requires lenders to provide the "price of the product, including a fee, charge or interest rate associated with the product" through the proposed CDR regime. However, we think this could be interpreted as generic pricing for a product rather than pricing based on a consumer's individual circumstances. For the CDR to really help consumers assess their options in this sector then, some level of personalised pricing information should be included in the CDR product data. We'd welcome clarification on this in the designation instrument or explanatory material.

We would like to thank the CDR team for providing the opportunity to respond to this important consultation process. We would be pleased to discuss our submission further at any time.