Hastily slipping on banking clarity: a cautionary tale for open banking data accuracy 

07 June 2024

A financial institution has recently faced enforcement action by the Australian Consumer and Competition Commission (ACCC) for alleged breaches of the Consumer Data Right (CDR). A penalty of $33,000 was incurred against the financial institution after the ACCC issued two infringement notices for allegedly failing to disclose complete mortgage interest rate details and accurate credit card balances in response to consumer data requests.

What is the CDR?

The CDR provides consumers the right to safely and conveniently elect to share data about them with accredited service providers, this extends to the financial services sector. Termed ‘Open Banking’, the CDR allows consumer banking data to be shared with third parties that have been accredited by the ACCC. Consumers are able to search across different banking products for competitive offers or to keep track of their banking information across various platforms.

For further information on the CDR, please refer to our previous article on preparing for an ‘open’ economy with the consumer data right regime. Click here to access the article.

The significance of data accuracy in the CDR regime

The ACCC investigated allegations that the financial institution failed to accurately disclose fixed-rate home loan interest rates from at least 20 February 2023 to 25 April 2023. Some of the product data for these loans lacked the featured interest rates advertised on the financial institution’s website. Additionally, from at least 9 January 2023 to 27 May 2023, the financial institution failed to accurately disclose credit card account balance data following consumer requests.

This is an issue of particular significance to the ACCC as the CDR regime is designed to ensure accurate data disclosure, providing consumers choice and access through accredited recipients.

As stated by ACCC Commissioner Peter Crone, the consequence of this lapsed data accuracy leaves brokers and comparator sites “unable to present accurate comparisons of home loan products to consumers”. Such inaccurate data disclosure can lead to consumer decision-making “based on incorrect information about home loan interest rates on offer”. This is especially concerning in the current economic climate where cost-of-living pressures and mortgage interest rates are critical considerations for many Australians.

The ACCC’s enforcement against data inaccuracy highlights the regulator’s commitment to ensuring data quality within the CDR regime. As Commissioner Crone noted, “For the CDR to be effective, it is critical that CDR data is of high quality. This means that product data and consumer data – which a consumer has consented to share – must be accurate, up-to-date, complete, and in the required format.” The ACCC penalty against the financial institution underscores the priority the ACCC places on transparency and open data flows in the Open Banking era.

Navigating CDR compliance: key considerations for banks

To comply with the CDR disclosure requirements, banks must focus on the following three critical aspects:

  1. Data Accuracy: Ensuring that all disclosed data accurately reflects the consumer’s financial information, including account balances, transaction history, product details, interest rates, and fees.
  2. Data Standardisation: Presenting data in a machine-readable format that accredited recipients can readily use. This involves adhering to specific data standards to ensure consistency and facilitate seamless data exchange.
  3. Transfer Security: Implementing robust security measures to protect consumer data throughout the disclosure process. This includes stringent authentication protocols, data encryption in transit and at rest, and adherence to industry best practices for data security.

If banks disclose inaccurate data then they must undertake immediate corrective actions, including notifying the affected consumer. The notice should identify the accredited data recipient, specify the disclosure date, identify the inaccurate data elements, and inform the consumer of their right to request corrected data.

Next steps

The recent enforcement action against the financial institution underscores the critical importance of maintaining data accuracy within the CDR regime. By adhering to data standards, implementing robust security measures and ensuring accurate consumer information, banks can navigate the complexities of the CDR regime and foster trust and transparency with their customers.

HWL Ebsworth can assist with compliance and CDR disclosure requirements and to navigate Open Banking obligations.

For further details on the ACCC’s enforcement action against the financial institution, click here to visit the ACCC’s official release.

This article was written by Luke Dale, Partner, Max Soulsby, Solicitor and Christopher Power, Law Graduate.

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