Our Letter to The Hon. Malcolm Turnbull (from Raiz, previously Acorns)
4 March 2016
The Hon. Malcolm Turnbull,
MP
Prime Minister
Parliament House
Canberra ACT 2600
Dear
Prime Minister,
Establishment of the FinTech Advisory
Group
I write to congratulate the Australian
Government on its decision to establish a FinTech Advisory Group, and I
continue to welcome the increased focus on encouraging innovation in Australia,
particularly in the FinTech sector. As
an active member of this community, and having recently launched our Acorns
product in Australia, I have experienced first-hand the dramatic surge in
activity in this industry, and I look forward to its continued growth.
That said, I strongly believe there is
major issue that, if left unresolved, will prevent FinTech innovation and
competition achieving its full potential in Australia.
It is my contention there is lack of
understanding and confusion in the public mind that they are no longer
protected by Australian regulations, and that the liability protections under
the terms and conditions on which they conduct their internet banking do not
apply when they deal with FinTech start-ups such as ourselves. This
is not the case.
I am concerned and disappointed to see
banks and other financial institutions seek to discourage users from engaging
with FinTech by exacerbating the confusion and fear in this area.
It should not fall upon the small start-ups
to educate investors about their rights and obligations vis-à-vis their banks,
and it should not fall upon small start-ups to monitor the information that is
being disseminated to consumers by bank employees.
To explain this more specifically, Acorns
is a micro investing / micro savings smartphone application. When a user signs up
to the app, they provide Acorns (and its service provider Yodlee) with their
bank account log-on details and password. There has been significant media
commentary (both social and mainstream),
including comments made by persons who purport to be bank employees, that by
doing this, the user becomes liable for any
unauthorised transactions. As you would expect, these type of comments are
creating great consternation and discouraging users from engaging with FinTech
companies, such as Acorns.
However, this commentary, and the stance
taken by the purported bank employees, is wrong. It is clear under the ePayments Code (Code) (which all major Australian banks have subscribed to) that
the user will not be liable for any unauthorised transactions because:
(a)
the user expressly appoints
Acorns and Yodlee to collect information on the user’s behalf only (i.e. Acorns
and Yodlee have “read only” access to the user’s bank account. They cannot effect transactions); and
(b)
Acorns and Yodlee protect the
data using encryption and bank standard security measures to keep it safe.
Consequently, the user does not breach the requirements of the
Code, nor the terms and conditions of their bank contract and does not become liable for any and all unauthorised transactions.
I would urge the FinTech Advisory Group and
ASIC to consider this issue, given their mandate to encourage FinTech
innovation, while reducing barriers and ensuring that these barriers are not
(mis)used by incumbent players to discourage competition. Unless this issue is
resolved, I believe it will stunt the development of FinTech, an integral part
of the Innovation strategy recently articulated by you.
Please be aware that we will release a copy
of this letter to our users (of which there are over 50,000) and to the media
at large.
Should you wish to discuss this matter
further or if you have any questions or comments, please contact me on 1300 954
678.
Yours faithfully
George
Lucas
Managing Director
Acorns Grow Australia
Limited
