Open data: Inquiry to scrutinise industry access to data

Government orders Productivity Commission inquiry

The government has commissioned a Productivity Commission inquiry into boosting the use of public and private sector data by individuals and organisations.

The inquiry was announced by Treasurer Scott Morrison as part of the government’s action plan contained in a fintech statement released today.

“Effective use of data is increasingly integral to the efficient functioning of the economy. Improved availability of data, combined with the tools to exploit it, is creating new economic opportunities,” the statement reads.

“The industry is seeking more standardised practices on financial data aggregation and government support for standard open-data application programming interfaces (APIs) to support FinTech innovators and give Australians better ways to understand, manage and maximise their finances,” it says.

Data held by the federal government was deemed a “strategic national resource” under a policy statement released last year as part of the ‘Innovation Agenda’.

That policy committed the government to an approach of open by default for non-sensitive data sets and to collaborating with researchers and the private sector to expand the use of government-collected data.

(Last month the government released the Geocoded National Address File (G-NAF) and Administrative Boundaries datasets as part of its open data push.)

A particular fintech sector priority noted by today’s statement is mandating comprehensive credit reporting (CCR) for large credit providers by end of 2016 and for small credit providers by end of 2017.

CCR became possible after changes to the federal Privacy Act that came into effect in 2014 allowed greater detail to be shared about an individual’s credit history.

The Privacy Amendment (Enhancing Privacy Protection) Act 2012 amended what had previously been a ‘negative’ credit reporting system to create a more comprehensive system that included more data on credit accounts including the date an account was opened, the type of account, when it was closed, its current limit and repayment performance history.

“The additional personal information will allow credit providers to make a more robust assessment of credit risk and assist credit providers to meet their responsible lending obligations,” that bill’s explanatory memorandum stated.

“It is expected that this will lead to decreased levels of over-indebtedness and lower credit default rates. More comprehensive credit reporting is also expected to improve competition and efficiency in the credit market, which may result in reductions to the cost of credit for individuals.”

“Access to comprehensive credit reporting (CCR) data would help facilitate the development of peer-to-peer lending products and marketplaces, and help drive further innovation in financial services. CCR is considered by many to be a vital part of Australia’s economic infrastructure,” the fintech statement says.

“CCR provides lenders with more information to identify a customer’s true credit capacity to enable more tailored lending that better reflects the capacity to service and repay loans.”

The use of standard open-data APIs should be mandated for CCR, the statement says.

Assessing the uptake of the credit reporting framework is included in the PC inquiry’s terms of reference.

It is anticipated that the PC inquiry will report by March 2017.

The government’s fintech statement also canvasses a number of other changes to boost the sector, such as overhauling the GST treatment of digital currencies such as bitcoin, and changes to venture capital rules, crowd funding, and financial ‘robo-advice’.

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