Don’t Trust Big Banks: FinTech Australia Questions Delay on Consumer Friendly Legislation

FinTech Australia, the leading voice for innovative finance in Australia, has published a note asking if one can trust big banks when it comes to consumer friendly regulation. The missive was in response to chatter that big banks are attempting to roll back or delay Comprehensive Credit Reporting – deemed a step forward for more user control of their own data. FinTech Australia is calling on Parliament to pass the legislation without delay. The organization adds that “relying on the big banks could end in disaster.”

The group states:

“FinTech Australia understands that there may already be some attempts by the big banks to delay or roll back the promise made by the ABA (Australian Banking Association). It is concerned this may have been the plan all along, and that the voluntary promise could be just another tactic to prevent a compulsory regime, something the big banks have opposed for some time. It says that the longer the big banks are allowed to delay reform, the more consumers will be forced to accept the status quo of products and services that don’t meet their needs, bad loans, and even worse the kinds of outcomes heard at the Royal Commission.”

CEO of FinTech Australia, Brad Kitschke, qualifies the move by banks as undermining competition and shifting control back to traditional finance. In many parts of the world, like in the UK, there is a push to empower users to have better control over their personal financial information thus enabling them to choose who has access to this data. Of course, this puts traditional banking in a bit of a bind as some of their business has been built on the backs of user data they tend to hoard.

”The legislation has been held up for long enough, and the argument that it can be put off even further because we can rely on the big 4 banks to provide it on a voluntary basis is foolish given their track record,” stated Kitschke. “The data about a consumer’s financial information is the consumers, not the banks. Allowing the big banks to control or restrict access is not in the interests of consumers.”

Kitsche said that Fintechs rely on accurate data about a person individual financial needs to develop products and services. Without access to this data, at the discretion of the individual, consumers will continue to be forced to accept the off-the-shelf generic products on offer from the big banks that don’t meet their needs.

“Any further delay or allowing the banks to be in control is only in the interests of the banks. You only need to read the transcripts of the Royal Commission to know that the strategy of trusting the banks to voluntarily act in the best interests of consumers doesn’t have a great track record of success,” said Kitschke said.

FinTech Australia adds that delays in passing the legislation, owing to the concerns of consumer advocates about hardship can be overcome.  It has established its own Consumer and Small Business Advisory Committee to allow concerns from consumer advocates to be better understood and insists that delaying legislation just hurts consumers.

“Delaying the legislation would just hurt consumers and empower and reward the big banks at a time when we should be doing everything we can to increase competitive pressure and scrutiny.  While the concerns of consumer advocates about hardship needed to be worked through a further delay would now hurt consumers and competition. We need to work together to be fair to consumers and promote competition.”

Kitsche says that delaying legislation hurts both consumers and undermines competition and just rewards the big banks.

With what we know from the Royal Commission, there should be a greater sense of urgency to increase competition, not rely on a voluntary promise from the big banks.”  Kitschke explained.

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