Open super in Australia: The Consumer Data Right could be extended to the superannuation industry
On 23 October 2019, the Senate Committee on Financial Technology and Regulatory Technology (Committee) published an issues paper regarding its comprehensive inquiry into fintechs and regtechs in Australia. One aspect of the inquiry looks into the possibility of extending the Consumer Data Right (CDR) to the superannuation industry.
Broadly, the CDR is part of the Federal Government’s Open Banking regime, which is meant to facilitate competition in the banking industry by allowing consumers to access and share data about themselves held by banking services providers. The consumers can choose to share their data with accredited third parties in a readily useable format. The current CDR regime applies only to the banking industry. However, it is envisaged that the CDR regime will be rolled out economy-wide on a sector-by-sector basis, with the energy and telecommunications sectors next on the list.
The Committee’s suggestion on extending the CDR to super funds follows the Productivity Commission’s (Commission) recommendation in late last year on rolling out the CDR for superannuation. In making this recommendation in its Inquiry Report, the Commission noted the need for super funds to better harness member data for personalising life-cycle and retirement products to better match them to diverse member needs. The Commission also pointed out the lack of accessible information for consumers on super products.
Accordingly, the Committee’s issues paper highlights the consumer benefits of implementing the CDR in the superannuation industry, such as improving consumers’ understanding of insurance cover provided by super funds, and transparency in fees charged by funds. The CDR in the context of super funds would also provide the fintech industry with the opportunity to grow through innovation.
While the high cost of CDR accreditation under the regime remains an issue for many fintech start-ups and funds, the Commission has recommended automatic accreditation of super funds to receive data (following member consent) held by banks under the Open Banking regime.
The issues paper invites any feedback, comments, views or suggestions on the CDR in superannuation and other issues. The deadline for making a submission is 31 December 2019.