Open banking should be extended to super sector: Productivity Commission
The Commission said there is "much scope" to harness data and technology to provide advice.
A landmark report into superannuation in Australia has called for the Consumer Data Right to be extended to the sector to allow funds to better harness technology and serve consumers. The Consumer Data Right essentially gives consumers control over the data that institutions and companies hold over them. By being able to choose to share their data, consumers can benefit from more transparent information about pricing and be able to compare products more easily. This right has currently been extended to the financial sector in the form of Open Banking, due to come into effect on 1 July 2019.
According to the report, "There is much scope for super funds to better harness data and technology to provide advice (including digital advice) and to design super and insurance products. This includes collecting and analysing more data about their members, as well as drawing on cost-effective imputed data that are not fund specific."
Currently, the Consumer Data Right has only been extended to the banking sector with a timeline established for a phased implementation. This timeline extends to 2021. By that date, consumers will be able to direct financial institutions to share data about their transaction accounts, credit card and mortgages and more to authorised data recipients.
The telecommunications and energy sectors are scheduled to follow the banking sector, with a sector-by-sector rollout planned for the open data economy. The Productivity Commission report said that the super sector should be lined up for the Consumer Data Right rollout to "accelerate progress" of the sector.
"The Government should roll out the new Consumer Data Right to super, and automatically accredit super funds to be eligible to receive information that banks hold on members (with their consent)."
The report says by opening data there will be scope for personalising life-cycle and retirement products to match them to what consumers need. The Consumer Data Right will also allow for more transparent pricing information across products, an issue called out in the report.
CEO and founder of Stockspot Chris Brycki welcomed the Commission's final report and agreed with the recommendation to open access to performance and fee information for funds.
"A major issue with the superannuation industry is the lack of disclosure of all costs. It's impossible to see how different products are really performing because the data isn't available to members in a standardised format," said Brycki.
You can find out more about what the Productivity Commission's report means for your super here and about open banking in our guide here.