Open Banking needs aggregators: Loan Market Group

Brokers need aggregator-designed tech to deliver the customer outcomes Open Banking was designed for, Loan Market Group has put forward as part of proposed changes to the scheme. 

In its submission to the proposed Consumer Data Right (CDR) extension, Loan Market Group - representing Loan Market, PLAN Australia, Choice and FAST - called for aggregators to be recognised as data recipients for brokers in Open Banking’s expanded ecosystem. 

If aggregators are excluded, the benefits of Open Banking to customers - using their own data for better and faster financial decisions - would be lost through complexity, it said. 

Loan Market Group’s Chief Compliance and Regulation Officer, David McQueen, said brokers needed the sophisticated tech aggregators offered to monitor and manage customer data through the ‘life-cycle of the adviser-client relationship’.

“Loan Market Group wholeheartedly believes brokers should be considered ‘trusted advisers’ in Open Banking,” he said.

“But the role of aggregators is unclear in the new CDR proposal.

“We believe holding a credit licence isn’t enough for brokers to add real value for their customers in the scheme. Brokers need the digital infrastructure aggregators deliver at subsidised cost to protect and optimise the sharing of their customer data.”

Allowing aggregators access to the data of consenting customers - which, in turn, was securely passed to the broker - better enabled brokers to fulfil the objectives of their clients. 

The involvement of aggregators would simplify the complexities of data sharing, including tech integration and risk management processes. Aggregator support would ultimately save brokers time and keep them safe in compliance, Mr McQueen said.

“Allowing aggregators to receive data will help reduce turnaround times on applications,” Mr McQueen said.

“Allowing aggregators, on behalf of brokers, to access verified data flows - instead of unverified documents - can significantly reduce home loan processing time.”

Mr McQueen said brokers worked in the best interests of their customers, providing wider and informed options in their financial journey, which aligned with what CDR had been designed for.

“To restrict the access of brokers, as trusted advisers, to their customers’ data would effectively mean Open Banking has hit its limit in enhancing the customer experience,” he said.

Loan Market Group made its submission on proposed CDR changes on behalf of its members within Loan Market, PLAN Australia, Choice Aggregation Services and FAST Group.