The Commonwealth Bank of Australia and Macquarie Bank have called for the Australian Tax Office to allow potential borrowers to share their tax data, claiming the information will provide a clear idea of borrowers’ income.
Related story: This tax refund text isn’t from the real ‘ATO’
CommBank said it supported technologies that allow “one-off sharing of certain data sets from the ATO” in a recent submission to the government’s inquiry into financial and regulatory technology.
The bank said access to this information would “significantly reduce the time taken for loan approvals, while also reducing errors. This data could be encrypted via an independent intermediary so that the bank had access only to relevant data elements.”
Additionally, fraud risks and regulatory costs would be reduced, the bank said.
Under such a plan, individuals would have the opportunity to either share their own tax data, or “large anonymised data sets” would become available.
Macquarie Bank has also called for consumers to have greater power over their personal financial data.
In its submission, it called for an expansion of the Consumer Data Right (CDR) to include institutions. The CDR is aimed at providing consumers with more power over how their personal data is used and shared.
It’s not the first time Macquarie Bank has spoken on the need to expand the CDR. In an interview with the Australian Financial Review last year, the head of personal banking at Macquarie, Ben Perham, said the ATO “holds a lot of really valuable and useful data about customers”.
“If you take the same principle [in the CDR law] – that data is the customer's – why can’t a customer ask the ATO to provide access to a bank to see that data with the ATO?" he said.
"That would be a wonderful way to verify income. It would be fascinating to compare the data.”
Treasurer Josh Frydenberg last Thursday announced an inquiry into ways the CDR can be expanded to boost competition.
As it stands, banks are developing programs allowing customers to share one-off data sets with other third parties like fintechs.
The programs will need to be ready for the 1 July 2020 launch of the sharing system, dubbed open banking.
Access to ATO data will allow banks to assess your income more quickly, but they’re already scrutinising outgoing expenses.
According to Gemmill Homes managing director, Craig Gemmill, lenders are increasingly looking at things like Uber Eats.
“Work on minimising unnecessary spending in the months prior to applying,” he said. “Less Uber Eats could have a significant impact on your chances of approval.”
“We literally go through your statements line by line,” Pink Finance’s director, Nicole Cannon, told Yahoo Finance.
“And we have to categorise it, and if the description has something suggestive in there, the banks may question it.”
That means that using a lewd label on money transferred to your friends could cause problems.
And even Netflix habits are in banks’ crosshairs.
According to new government Responsible Lending Conduct guidelines, banks should ask for “additional information”.
“The affordability of the credit product is likely to be an important requirement for most consumers, and many consumers will need to reduce their current expenditure to afford the repayments and other financial obligations they will be committing to,” the report from the Australian Securities and Investment Commission said.
It suggested borrowers cancel streaming services like Netflix, and for the bank to then request proof that the potential borrower had ended their subscription.
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