New idea could save you plenty on your home loan

Early in the week the Federal Government released some draft legislation based on what they have called the “Consumer Data Right”, which they say is designed to “empower customers to use their data for their own benefit”.

As part of this Consumer Data Right, a consumer who banks with one institution would be enabled to share their data with rival banks. Once these competing banks have analysed that data, they would be able to offer you a competing product, based on your specific financial habits.

Obviously, some readers would be concerned about the security of our financial data. However, in releasing this concept, Scott Morrison said that under this plan, each consumer would have the sole right to decide how this data is shared, and with whom. “It will arm Australians with the right information they need to seek better deals on banking products and loans, with further sectors such as energy and telecommunications services to be added over time,” he said.

The ability to share your data with a chosen lender would certainly help overcome any concerns that people have with the perceived complexities in seeking out financial deals, which we know can be a real issue for many people.

For example, the recent review of Competition in the Financial System found that the average Australian household could save up to $1,000 per year by refinancing their mortgage, yet this is an option that many home owners have not pursued.

Our new Prime Minister said, “Many customers need help in managing this complexity – in assessing, selecting and using those offerings. The Consumer Data Right will enable customers to get assistance and tailored support from third-party service providers, by granting access to their data.”

It will certainly be interesting to watch what happens with this new idea, particularly now that we will have a new Treasurer taking over that portfolio in the next week or so. But if the end result makes it easier for people to shop around for a better deal on their home loan or credit card, and this can be achieved securely, then it’s hard to find fault in the idea.