Govt expected to move on data sharing
The Government is expected to move this week to bring data sharing closer to reality in the financial sector.
Tuesday, August 30th 2022, 7:59AM
by Eric Frykberg
Ultimately, the reform could facilitate people switching mortgages online by requiring one bank to share loan data with a rival.
The system was introduced in Australia in 2019 and was raised as an idea here in the same year.
It took a further step forward in 2021, with a decision by the Government to introduce the scheme in principle. The next stage has been expected all this year and is now thought to be imminent.
The reform would establish a Consumer Data Right (CDR). This was described by the Government as a mechanism to allow consumers to securely share data that is held about them with trusted third parties.
“Giving consumers greater control over their data will make it easier for them to shop around and switch providers for services such as banking, electricity and telecommunications,” wrote a cabinet paper last July.
“This will give them access to new products that are only viable when data is shared.”
The scheme was envisaged for many sectors, such as insurance companies as well as utilities, but the initial attention has been focussed on the lending industry.
The cabinet paper made clear that the scheme would work by allowing one provider access to the system used by a rival.
That would enable the newcomer to examine the details of an existing contract and work out an effective mechanism for making an improved offer.
It would be introduced gradually, sector by sector, and would involve strict controls on privacy and banking security. It would also be done on an opt-in basis by the customer.
Eligible participants would also need to be approved in advance.
It is understood the Government has baulked at some of the huge privacy problems in the insurance sector, especially health insurance. But it is thought to be quite keen on bringing data sharing to the loan market.
Further details will be apparent when the announcement is made, and all parties would need to comply with the Privacy Act. There would also need to be highly secure data transmission systems.
When open data was first proposed, the New Zealand Bankers Association welcomed it in principle, but called the proposal “high level and lacking in detail” and said neither the benefits, nor the risks, had been analysed properly.
The Financial Services Council (FSC) said CDR could bring improved transparency and business innovation.
But it carried the risks of data breaches and higher costs which could be passed onto the consumer.
The online small business lender Prospa also submitted at the time. It strongly supported CDR, and added several recommendations. These included making it available to small businesses as well as consumers. It also wanted the scheme to be brought in carefully by a special implementation entity.
Prospa also called for a “bespoke consent management framework” to oversee relations between data recipients and intermediaries.
| « Fixed rate mortgages may have peaked: Kiwibank | More evidence of housing burden on the elderly – Treasury research » |
Special Offers
Comments from our readers
No comments yet
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
