Bank customers get rights to own data. Open Banking laws passed by parliament yesterday give consumers more rights to access their own data held by banks and makes switching to a new bank or lender easier. The Morrison government’s Consumer Data Right legislation targets the financial services industry first and will later be extended to the energy and telecommunications sectors as well. Australian Banking Association chief Anna Bligh said the laws are “empowering customers with the ability to use their data to drive a better deal on banking products.” “This has the potential to dramatically increase competition,” said Ms Bligh. The new laws come into effect by the end of August. Banks will make credit and debit card data, as well as deposit, transaction and mortgage account data more freely available and giving consumers the right to share their account information with other institutions and could help them secure a better deal. What does Open Banking mean for me? The Morrison government’s Consumer Data Rights (Open Banking) laws were passed by parliament yesterday and will come into force by the end of August, giving bank customers more rights to access their own data and transfer their accounts to new institutions. “We will see the elimination of products and services that are complicated, convoluted and rip customers off,” MoneyPlace chief executive Stuart Stoyan told The Australian. “It shouldn’t be that hard to get a credit card, mobile phone plan or energy contract that is simple, easy to understand and in your best interests. “The Consumer Data Rights empowers consumers.” Aussies are lining up to switch lenders. More than 4.4 million applications for consumer credit are expected in the next six months, according to credit reference agency Equifax. Despite the loan market dropping 5.9 per cent since June 2018, 11 per cent of Aussie consumers intend to apply for credit this year and more than half (53 per cent) are looking to switch lenders from their existing providers to a better deal. “10 per cent of consumers have switched credit products in the past year,” said Moses Samaha from Equifax, “More intend to apply for credit in the coming months.” Who are the switchers? More than half of all people looking to apply for a loan in the next six months are switching from an existing loan or credit facility to a new provider according to new data from credit reference agency Equifax. Young people, aged 18-34 are the people most likely to be looking to switch their home loan or personal loan to a building society or credit union, according to Equifax. Generation X consumers (aged 35-50) are the people most likely to prefer a small bank for their home loans (55 per cent) and personal loans (39 per cent). The big four banks are still the first option for credit cards for most people. Young people are taking control of their credit. Young people are particularly active in the market for credit products according to credit reference agency Equifax. 18 to 34-year-olds are more inclined to consider switching to find a better deal than people in other age groups. 43 per cent of people who have switched lenders in the past 12 months are aged 18 to 34 said Equifax. Moses Samaha from Equifax said young people were also choosing Buy Now Pay Later services, rather than credit cards, in greater numbers than ever before. Samaha told Banking Day that cost is the main reason for people switching credit card providers. “Other factors are also at play, better features, for instance, loyalty reward programs and customer service.” ME Bank sets lowest serviceability rate. From today, 2 August 2019, ME has a new minimum serviceability rate to 5.25 per cent. ME Bank increased its buffer rate to 2.50 per cent over the offered loan interest rate. That means that ME will assess applicants’ ability to repay their loan against a rate 2.5 per cent more than the offered rate, or 5.25 per cent, whichever is greater. Most lenders have adjusted their floor serviceability rates to 5.50 per cent or more. A potential borrower applying for ME’s Flexible home loan with Member Package (80% LVR, loan amount $150K to $400K, P&I, OO) with a variable rate of 3.52 per cent p.a. (comparison rate 3.95 per cent p.a.) will be assessed on their ability to repay the loan if rates go up by 2.5 per cent or 5.25 per cent (whichever is greater). So their serviceability rate would be 3.52 + 2.5 = 6.02 per cent p.a.