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Peer2Peer Finance News | September 18, 2019

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Platforms call for time extension to Open Banking consents

Platforms call for time extension to Open Banking consents
Marc Shoffman

PEER-TO-PEER lenders are calling for a change to Open Banking rules to make it easier to access borrowers’ financial data for the duration of a loan term.

Under the current framework of the data-sharing initiative, borrowers can grant alternative lenders access to their banking data but must reapprove the permissions every 90 days.

This may cause an issue for lenders who want to monitor a borrower’s financial situation over the longer term.

Read more: UK first for Open Banking as debt management firm automates reviews

For example, P2P business lender Growth Street uses Open Banking to assess potential borrowers and to help monitor their ongoing cashflow and financial strength, which may be problematic if data access is refused during a long-term loan.

Greg Carter, chief executive of Growth Street, said Open Banking had made the process easier for borrowers but called the three-month reapproval requirement an unnecessary burden.

“We do plan to request that the Open Banking Implementation Entity extends the maximum connection length from 90 days to indefinite,” he told Peer2Peer Finance News.

“The expiry of connections after 90 days means a potentially higher risk that a borrower could lose access to their facility – for example, if data loss results in our credit teams reducing or even removing the facility.

“We believe businesses should be given the choice to give permanent consent to third parties to access their data that can be revoked at a time of their choosing, and not be forced to reconnect every 90 days.”

Read more: Open Banking start-ups join Accenture’s fintech innovation lab

These views were echoed by Brian Bartaby, chief executive of P2P property lender Proplend.

“If we are looking at loans where terms can be up to five years, we are unlikely to be able to get borrowers to refresh their Open Banking permission every 90 days, or 20 times during the life of the loan,” he said.

Read more: P2PFN‘s special report on Open Banking

Carlos Figueredo, the former head of data standards at the Open Banking Implementation Initiative, said the time limit was introduced to give customers a safety net but acknowledged there are disadvantages.

“It does create an issue for lenders as the user may be unavailable at the time that reapproval is need,” he said.

“A lender may end up having to recall a loan. This does need to be looked at.”

This article featured in the April issue of Peer2Peer Finance News, now available to read online