MELBOURNE (Reuters) - Australia's major banks will have to make customer banking data available to other service providers by mid next year, the Australian government said on Wednesday, as the country seeks to raise competition across its scandal-hit banking sector.
The new regulations will give banking customers greater access to the data that their banks hold on them and the ability to direct that data to accredited service providers of their choice, Treasurer Scott Morrison said.
The new rules are due to come into force from July 2019. They may further squeeze the banks' margins which are already expected to come under pressure as banks review lending practices after a spate of scandals, slowing credit growth.
Australia's "Big Four" banks are smarting after an enquiry into their business practices found a string of damaging incidents involving rate-rigging, money laundering and unethical conduct in wealth management and insurance.
Australia's major lenders include Australia and New Zealand Banking Group Ltd (AX:ANZ), Commonwealth Bank of Australia (AX:CBA), Westpac Banking Corp (AX:WBC) and National Australia Bank Ltd (AX:NAB).
The banks collectively dominate property, investment and business lending, giving Australians limited options when seeking credit.
"Customers will be able to use their new data rights to find better deals on their credit cards, mortgages and other banking products," Morrison said.
"Comparison services will be better able to assess the value and suitability of all available products, taking into account the individual circumstances and needs of the customer. This will help to break down barriers that see customers staying with their banks even when there are better deals elsewhere."
The new rules by the Australian Liberal-National coalition government come amid widespread outcry against the sector after the enquiry, and ahead of an election expected next year.
All major banks will need to make data available on credit and debit card, deposit and transaction accounts by July 1, 2019, and mortgages by Feb. 1, 2020.
Remaining banks will be required to make the data available 12 months after the major banks.
The data arm of Australia's science body, the CSIRO, will act as a standards setting organization, in collaboration with industry, FinTechs, and consumer and privacy groups.
The data rights will then be applied to Australia's energy and telecommunications sectors to give consumers better choice in their energy, internet and telephone contracts, the Treasury said in a separate statement.