Feedback sought on CDR non-bank lender tweaks

Assistant Treasurer and Minister for Financial Services, Hon. Stephen Jones MP, formally designated the non-bank lending sector as subject to the CDR and is seeking to “support consultation” and elicit feedback via the design paper, which is available for stakeholders’ consideration, Treasury has explained.

Such stakeholders have less than 60 days to “have their say” before the consultation ends on 31 January, 2023.

Treasury and the Data Standards Body seek input on the development of rules and data standards to aid implementation of CDR in the non‑bank lending sector.

A key point the design paper will highlight is the cost of compliance to the sector and the implications and applications of CDR to different-sized non-bank lenders, it explained.

That is, Treasury noted that concerns were raised about the potential cost of compliance on smaller non-bank lenders and the adverse flow-on effects for innovation and competition in the sector.

As a result, the report recommended “the rules exclude small non-bank lenders below a certain threshold (also known as a de minimis threshold) from mandatory data-sharing obligations.”

“Treasury considers the de minimis threshold for data holders should capture the largest non-bank lenders without reducing competition or innovation by discouraging or hindering small providers through disproportionately high compliance costs,” it stated.

“Non-bank lenders who fall below the ‘de minimis’ threshold will still be able to elect to share data through the CDR on a voluntary basis,” it confirmed.

The proposal being put forth to address this is to limit required data sharing obligations for designated data holders to non-bank lenders that have total resident loans and finance lease balances of over $400 million.

“The threshold aims to exclude the long tail of smaller entities, while requiring the larger entities that make up a substantial market share of the lending sector to participate,” Treasury outlined.

The good, the bad and the ugly

A whole raft of issues will be raised and answers to key questions sought. Topics covered include: the scope of data sharing in the non-bank lending sector; what data holders should be required to share CDR data; discussing white labelled products and looking at securitisation; defining what products are in scope; dating-sharing obligations in relation to trial products; what data is excluded from data sharing requirements; and defining eligible CDR consumers in the non-bank lending sector – to name just a few.

Ultimately, there are 34 questions that the design paper is addressing, with some key highlights including:

- What are stakeholder views on the threshold proposed by this paper, i.e. $400 million in total resident loans and finance lease balances? Are there other measures that could be considered for a threshold?

- Is the proposed $400 million threshold likely to capture entities with sufficient regulatory maturity and capability to comply with mandatory data holder obligations?

- Are there any sector-specific considerations for white labelling that need to be taken into account when making guidance and/or rules for the non-bank lending sector? Are changes required to facilitate white labelling arrangements in non-bank lending?

- Is the proposed list of products in scope for the CDR appropriate for the non-bank lending sector?

- Does the banking account detail schema meet the requirement of the non-bank lending sector?

- Should ‘financial hardship information’, as defined by the credit reporting regime, be explicitly excluded from data sharing requirements? If so, are there implications for doing so given the interaction with the credit reporting regime?

- For non-bank lenders, what proportion of customers would be excluded if a requirement for ‘online’ account access was included in the definition of eligible consumer?

- Are there specific features of the non-bank lending sector, or products, that mean sector-specific variations to the concepts of secondary users, joint accounts or nominated representatives will need to be considered?

- How does the non-bank lending sector currently describe the recommended required data to consumers? Are there synergies with the existing banking data language standards, or do revisions and expansions need to be considered?

Have your say today!

Treasury has advised that while submissions may be lodged electronically or by post, electronic lodgement is preferred.

“Feedback, comments and ongoing discussion can also be lodged on the public GitHub page maintained by the Data Standards Board,” it explained.

All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless participants indicate otherwise.

Legal requirements - such as those imposed by the Freedom of Information Act 1982 - may affect the confidentiality of submissions, Treasury reminded. 

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