The Financial Rights Legal Centre has made the call to the Australian government, in a joint submission to Treasury.
The group has strongly opposed an opt-out model for joint accounts, which would enable an individual joint account holder to independently share data on the account and consent to an accredited institution to collect and use the information.
Account holders would need to proactively turn off the data sharing prior to the scheme commencing or stop the process after it has started.
Among other concerns, the Financial Rights submission warned that the model runs counter to current privacy principles, contradicts the consent model central to the consumer data right and could increase risks of financial abuse, elder abuse or domestic violence.
Financial Rights chief executive Karen Cox said the proposed opt-out regime fundamentally undermines the right to affirmative consent.
“Australians want a safe and secure data environment that puts their privacy ahead of the increasingly rapacious desires of industry,” Ms Cox said.
“Treasury’s proposal undermines the privacy rights of citizens and subverts the open banking regime’s own requirements to provide Australians with the ability to voluntarily and expressly consent to the sharing of their data with other parties.”
She added the opt-out proposal “contradicts basic privacy principles already set out in the consumer data right”, warning it could undermine trust in the regime before it even starts operating.
“It runs counter to the Australian Competition and Consumer Commission’s recommendations to strengthen consent requirements and puts the business interests of the fintech sector ahead of the need to protect consumers’ privacy and security,” Ms Cox said.
“It also poses significant risks to vulnerable people facing financial, elder or domestic abuse.
“Consumers – be they joint account holder or not – should be free to decide how much or how little of their information they wish to share in exchange for the use of open banking services.”
Industry feedback for the joint account updates ended on Wednesday (26 May). New compliance dates are still yet to be set for the rules.
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Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth for InvestorDaily and ifa.