Senate committee refrains from screen-scraping ban

The Senate committee was formed last year to inquire and report on the opportunities, effectiveness and barriers to financial technology (fintech) and regulatory technology (regtech). 

The inquiry into facilitating increased competition in Australia’s financial sector, which reopened for submissions in March 2020 following the unfolding of the COVID-19 pandemic and its associated technological accelerations, has now concluded, and the interim report has been released.

In the 281-page interim report, the Senate committee put forward 32 recommendations, which chair senator Andrew Bragg said could be viewed as a series of “quick wins”.

Among the recommendations impacting the mortgage industry were recommendations that the practice of screen scraping be allowed to continue for the time being.

The inquiry received submissions both for and against the practice of screen scraping, which involves collecting screen display data from one application and translating it for another application to display (enabling fintech businesses to receive data from customers and therefore provide tailored services). 

Advocates for the ban cited potential security issues, while objectors cited issues of competition.

After reviewing the submissions and evidence, the committee concluded that “an outright ban on screen scraping is not prudent at the present time, and that in many cases these practices are enabling companies to innovate and provide competition in the financial services sector”.

However the committee suggested that the situation “continue to be monitored” as open banking is rolled out, adding that ASIC’s current consideration of the ePayments Code will also provide “important input” on this issue.

As such, recommendation 22 is that the Australian government “maintain existing regulatory arrangements in relation to digital data capture”.

It was noted, however, that the committee’s recommendation was not supported by Labor senators, who argued that there were “legitimate concerns of primary service providers regarding unauthorised access to their online security systems” and stating that it was “premature for the committee to provide the above recommendation, which effectively calls for the permanent maintenance of digital data capture, prior to ASIC providing further guidance on any potential consumer liability under the ePayments Code”.

The move has been welcomed by several fintech players, including investment platform Raiz (which has previously accused CBA of deliberately blocking its customers from using the platform, citing security risks).

Raiz Invest CEO George Lucas said: “This recommendation by the committee is an important step forward in allowing genuine competition in the Australian financial services sector.

“Although the committee acknowledged that it would take time for the open banking regime to provide a level of data quality and ubiquity that is available using digital data capture services, it also rightly pointed out that the correct place to address the issues associated with screen scaping is within the ePayments Code, which is currently under consideration by ASIC, due to its potential to significantly reduce fraud associated with online payments.”

Mr Lucas proffered that the current regulatory playing field “remains significantly skewed in favour of the big four and the Apples and Googles of this world”.

“Today, the reality is that this bias is still the regulatory norm for our industry. But hopefully this report will be another catalyst for change that will encourage fintech innovation in Australia that puts consumers first,” he said.

‘New jobs and more choice’

Other relevant recommendations put forward by the committee included:

• That the Corporations Act 2001 and other relevant legislation and regulations be amended in order to allow for the electronic signature and execution of legal documents;
• That relevant regulations be amended in order to enable the witnessing of official documents via videoconferencing or other secure technological means (however, this largely related to telehealth and e-prescriptions);
• That the Australian Competition and Consumer Commission, or a new national Consumer Data Right (CDR) body (which the committee also recommends is established), finalise the rules for intermediary and third-party access to CDR banking data by late 2020 and enable intermediaries to enter the CDR ecosystem as soon as possible thereafter;
• That the Australian government establish a new national body to consolidate regulatory responsibilities in relation to the implementation of the Consumer Data Right; and
• That the Digital Identity reforms led by the Digital Transformation Agency be accelerated in order to deliver a national, economy-wide framework for the operation of a federated digital identity ecosystem as soon as possible.

A range of recommendations also focused on creating a stronger competition mandate to promote innovation and guard against anti-competitive behaviour in Australia and support for buy now, pay later products.

Speaking after releasing the interim report, Senator Bragg said: “As Australia faces its first recession in 30 years, it’s clear we need more jobs, and the only way to do that is to embrace technology and become globally competitive.

“It is my hope this interim report can be seen as a series of quick wins: new jobs and more choice.

“The committee has made a number of other recommendations in the areas of regulation, tax, capital and funding, skills and talent, and culture,” he said.

“Australia should continue developing as a leading Asia-Pacific fintech nation especially as Hong Kong declines as a financial centre.”

He continued: “More jobs and better consumer choice will emerge if we are competitive and iterative in our approach to policy formulation.

“We’ve already shown we can be smarter and more innovative during the pandemic. That’s why we’ve called for the extension of virtual AGMs, technology neutral laws and a permanent telehealth system.”

The committee’s final report is due in April 2021.

[Related: FinTech Australia accuses majors of ‘anti-competitive’ behaviour]