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MFAA calls for BNPL inclusion in open finance

The body has said the addition is needed for CDR to be “truly inclusive of the whole non-banking lending sector”.

The Mortgage and Finance Association of Australia (MFAA) has published its submission to Treasury regarding its recommendations for consumer data right’s (CDR) entry into the non-bank sector.

Among its recommendations, the association calls on the federal government to extend open finance to cover the buy now, pay later market. 



As referenced by MFAA in its submission, recent data has suggested BNPL is increasing in popularity. According to ASIC’s 2020 report, Buy now pay later: An industry update, the use of BNPL products increased from 16.8 million in 2017-18 to 32 million ended 2018-19.

Further, a 2020 release published by IBISWorld said that BNPL adoption is expected to continue in the wake of credit cards and their declining popularity.

Earlier this year, regulators approved the $39 billion sale of BNPL provider Afterpay to payment technology provider Block (formerly known as Square).

“If open finance is to include merchant acquiring services, the purpose of which is to obtain card transaction (i.e. payment) data, it makes sense that open finance also includes BNPL data,” MFAA noted in its submission. 

“In our view, for open finance to be truly inclusive of the whole of the non-banking lending sector, it needs to include BNPL.”

MFAA added that CDR “should be expanded to apply to particular types of financial information shared with government”, specifically highlighting tax return information as one example. 

The industry body also recommended in its submission the need for consumer awareness and government-sponsored use cases to speed up the adoption of CDR. 

“As trusted advisors, mortgage brokers, with the consent of the customer, can access a customer’s CDR data. The mechanism by which that data is accessed is through an accredited data recipient,” the submission stated.

“The CDR framework therefore requires the creation of technological solutions for that consent and access to occur.”

Further, the MFAA called for open finance to include finance brokers as trusted advisers under CDR. 

“In line with the government’s commitment to make it easier, through CDR, for small businesses to access finance and noting that brokers are an important channel in connecting small business borrowers with lenders, we also support the inclusion of commercial brokers as trusted advisers,” the association added.

The value of including finance brokers comes after recent perceptions of the benefit CDR has provided the mortgage broking industry. 

Speaking on the intersection of CDR with mortgage brokers, NextGen national head of broker partnerships Renee Blethyn said it could allow brokers greater access to more information on their client’s information

“In terms of the actual loan application process, as open banking evolves within the lending and the broker channel, we will hopefully see that lender policies will change around the documentation that consumers need to provide to support a loan application, which will reduce significant pain points for borrowers,” Ms Blethyn said.

“We see that open banking will streamline that process considerably because less documentation will be required, and more accurate information and richer data will be provided upfront based on the accuracy.”

Earlier this year, Treasury confirmed the wider financial sector would be an incoming target for CDR incorporation.  

The federal department has previously said the addition of CDR into the finance sector - which includes non-bank lending, superannuation and general insurance - would build on the “growing momentum” of open banking and spur more product variety and product awareness for consumers.

The concept is still in its early stages of development, with the sectoral assessment into non-bank lending’s place in open finance having closed to submissions earlier this month. 

[Related: 'Open Finance' named as next CDR priority]

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