Open banking a solution to royal commission lending concerns

The government’s “Open Banking” regime will allow banks to meet stricter requirements to lend responsibly that may flow from the Hayne royal commission, experts say, because it will allow each major bank to get the actual income and expenses data from new customers’ existing banks, avoiding the need to rely on estimates or benchmarks.

After the banking royal commission expressed concern about ANZ Banking Group not checking borrower expenses submitted by mortgage brokers, ANZ’s business services head, Nigel Dobson, told The Australian Financial Review Banking & Wealth Summit that open banking will “help us to enhance our responsible lending obligations, as we will have more precision and transparency around a customer’s full credit features, and how they are doing in terms of how much they are spending, what they are spending it on, and their savings.”

Under open banking, banks will only be able to access data held by another bank if the customer allows it, given customer control is the central principle of the regime. Federal Treasurer Scott Morrison and Australian Competition and Consumer Commission chairman Rod Sims told this week’s Summit open banking is designed to lift competition by encouraging customers to switch banks and encouraging fintech.

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Source: Open banking a solution to royal commission lending concerns | afr.com