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October 2019: This submission is to the Senate Select Committee on Fintech and Regtech. Visit our government submissions hub for more Finder submissions to government consultations and inquiries.
Finder would like to recommend three issues for consideration by the Select Committee including:
Finder has been very supportive of the introduction of Consumer Data Right (CDR) in Australia. We believe CDR will empower Australians to take control of their personal data and equip them with the information they need to make better financial decisions. As our business sits across many of the impacted categories, we look forward to helping Australians connect the dots between their newly available datasets. In recognition of this, we have been proactively supporting the development of CDR by working closely with the Treasury, ACCC and Data61 on different parts of the legislation including a bespoke report to test the product reference data released in July 2019 against the data in our product database.
One area of concern, however, is the need to fast-track legislation of "write-access" for banking data in Australia. To date, the CDR legislation in Australia legislates only for "read-access" for banking data. This position stands in contrast to most other implementations of open banking in jurisdictions like the UK, Japan and the European Union. Broadly, we define our view of the two ways to access data below:
In summary, ​read-only CDR​ gives customers powerful insights about the way they spend money but it's actually​ write-access CDR t​hat gives them the power to act on these insights quickly. Without write-access a customer still has to go through the same slow process to change provider or make/cancel a payment. Write-access CDR could act as an antidote to the inertia we see today in the retail banking market.
We recognise that introducing write-access will require higher minimum standards when it comes to information security. We also acknowledge that setting and implementing these security standards will take some time. It is for these reasons that the implementation of write-access in the CDR framework should start today to create the time to do this well. If we do not act today, and write-access CDR takes 3-5 years to implement as it has been rumoured, Australia will be left behind in the global competition for fintech innovation. We also believe that setting higher standards for information security in the CDR framework will provide an exciting business opportunity for ambitious Australian regtech businesses.
For many years we've been helping Australians make decisions about their superannuation. A section of Finder assists consumers with ​comparing superannuation funds​ and we have undertaken a significant amount of consumer research on the topic. We have consistently found that engagement in this category is relatively low compared to the other categories covered by Finder. We've highlighted some of our key findings below:
As a result, we agree with Recommendation 13 from the ​Productivity Commission inquiry into superannuation​ that Consumer Data Right should be rolled out to superannuation. As noted by the ACCC, CDR is intended to "improve consumers' ability to compare and switch between products and services. It will also encourage competition between service providers, leading not only to better prices for customers but also more innovative products and services". We believe that increased competition and innovation in the superannuation industry will be hugely beneficial to Australian consumers.
Lead with product reference data for superannuation funds
We recognise that working through the full CDR designation instrument for the superannuation industry will take time. However, a quicker way to boost competition in this sector could be to make product reference data publically available in a machine-readable format in relation to superannuation funds. We would like to see a consistent API from all providers that allows us to access accurate and up-to-date information on fund performance, fee structure and feature information for all (or at least the largest) super funds in Australia. This would make it easier than ever for platforms like Finder to provide a service that helps consumers to choose a fund that is most suitable for them. Product reference data was the first thing made available under CDR for banking and we would advocate for a similar approach in superannuation. As with CDR for other sectors, we would be happy to assist the Data Standards Body with creating a format for this product reference data that maximises the utility of the dataset.
Reduce inconsistency with how super funds present their fees
Currently, the way each super fund presents its fees is inconsistent and complicated. Some funds present the admin fee as an annual cost in dollar terms, some present the fee as a weekly cost and some present the admin fee as an annual percentage of the account balance. In addition, some funds will charge a percentage-based annual investment fee, while others might not charge an investment fee but might charge a higher indirect cost ratio (ICR) fee. On top of this, funds change their fees regularly.
As a result, it's currently difficult for consumers to compare the true cost of one fund against another. By including superannuation in the CDR, platforms like Finder will be able to access a consistent API from funds with accurate and up-to-date information on the fees they charge. We can use this fee information to build engines and tools that convert the different dollar figure and percentage-based fees into one annual cost, so consumers can more easily compare.
Improve understanding of insurance cover provided by super funds
It can be difficult for consumers to understand how much they're paying for their automatic insurance cover within their super, and the value of that cover. This information is often buried in the fund's PDS and, like the fees, is presented in a variety of ways from fund to fund.
Being able to access the costs of insurance and the amount of cover via an API from each fund will enable us to include this detail in our superannuation comparison engines to help consumers understand the value of the included insurance. Another benefit is helping consumers compare this with other insurance options outside of superannuation.
Longer term, we would like to see CDR for superannuation make it easier than ever for Australians to move and consolidate their superannuation to the fund or funds that are most suitable for them. Making this as simple as possible will likely require the "write-access" being made available as discussed earlier in issue one.
Finder would also like to see Consumer Data Right introduced to the market for car insurance. We offer a popular ​car insurance comparison service​ on the Finder website but more can still be done to improve outcomes for Australians in this category. A useful reference point here is the Financial Conduct Authority (FCA) General Insurance market study​ from the UK released in October 2019. We point you towards the ​International Comparisons annex​ of the study which makes the following points:
When it comes to the cost of car insurance for consumers, the average comprehensive car insurance premium in the UK has reduced by 18% from Q1 2017 to Q3 2019 according to figures from the MoneySuperMarket ​Car Insurance UK Price Index​. In contrast, there has been a steady increase in the average comprehensive car insurance premium in Australia in the same period according to indexed-figures from the ​Insurance Council of Australia​.
Finder believes that introducing CDR in the car insurance market will improve outcomes for consumers. We advocate for a similar approach to what we have suggested for superannuation – a quick win for improved competition coming from making product reference data publically available in a machine-readable format in relation to motor insurance products. This would allow comparison services like Finder to show customers accurate and up-to-date information on price, coverage and features for motor insurance products in Australia. As with CDR for other sectors, we would be happy to assist the Data Standards Body with creating a format for this product reference data that maximises the utility of the dataset.
Unpacking the Treasury recommendations for the future of the Consumer Data Right and what this means for Australians.
Finder's submission in response to the Treasury Review of the Australian Payments System.
Finder's submission in response to the Inquiry into Future Directions for the Consumer Data Right.
How CDR should approach authentication to benefit all Australian consumers.
The government wants to be a leading digital economy by 2030.
Read Fred Schebesta's response to the Select Committee on Fintech's interim report.
In our response to the ACCC consultation on the CDR energy rules framework, we put forth four key recommendations to help Australians to make better decisions about their energy products.
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In this submission to the Treasury inquiry into Future Directions for the Consumer Data Right being led by Scott Farrell, we focus on the topic of switching and how this could be encouraged through the introduction of write-access to the CDR. We also share some details on switching in the industries set to be covered by the CDR, as well as high-level views on how write-access could be used to enable payment initiation through the CDR.