The broker association has outlined it wants the statutory review to ensure Digital ID streamlines lending and property transactions.
The Mortgage and Finance Association of Australia (MFAA) has called on the federal government to make Digital ID interoperable across lending and property transactions, warning that the regime must reduce repeated identity checks.
In its submission to the statutory review of the Digital ID Act 2024, the MFAA said the system’s value would depend on whether consumers could securely reuse verified identity information throughout the broader lending ecosystem.
“Digital ID will only deliver its full benefits if identity information can be used securely and efficiently across the broader lending ecosystem, rather than requiring consumers to repeatedly verify their identity with individual participants,” the association said.
The statutory review comes as the federal government expands the Digital ID framework beyond government services and prepares for broader private-sector participation.
Linking lending and property checks
The MFAA said Digital ID had the potential to simplify a mortgage journey involving multiple organisations and overlapping identity requirements.
“A mortgage transaction involves multiple parties across the lending and property ecosystem,” the MFAA said.
“A consumer may have their identity verified to meet a lender’s customer identification requirements under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF), and separately through Verification of Identity (VOI) requirements for property settlement and mortgage registration.”
The association said the private-sector rollout created an opportunity to address that duplication through compatible laws and systems.
“The expansion of Digital ID provides an opportunity to reduce this duplication through greater regulatory and technical interoperability,” the policy submission said.
The MFAA also urged the review to consider how Digital ID would interact with AML/CTF customer identification, VOI, verifiable credentials, and the Consumer Data Right (CDR).
The association said that CDR-enabled sharing was already used across lending, credit, and broking and that closer alignment could curb unnecessary identity checks and document collection.
“Greater interoperability would provide consumers with a simpler and more secure experience while maintaining appropriate consent, assurance and regulatory safeguards,” the MFAA said.
Adoption must not add friction
Identity fraud was another major focus of the submission, with the MFAA saying that Digital ID could reduce the amount of sensitive customer information copied, moved, and stored during a lending transaction.
“Identity fraud is a particular risk in lending, where brokers and lenders handle significant amounts of sensitive identity and financial information,” it said.
“Digital ID can reduce reliance on collecting, transmitting and storing copies of identity documents, limiting the exposure of this information to theft and misuse.”
However, the association said adoption would depend on consumers understanding and trusting the system and on Digital ID replacing existing processes where appropriate.
“The MFAA recommends that Government continue to build consumer awareness and confidence in Digital ID and address barriers to its adoption,” it said.
“Importantly, implementation should reduce existing identity verification and document-handling requirements, rather than add another verification step to the lending process.”
It added that businesses needed clarity on when an accredited Digital ID result could be accepted, when further checks were required, and who carried responsibility if a credential was later found to be fraudulent or compromised.
[Related: Broker associations press Senate to improve mortgage market barriers]
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