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Westpac Opposes Proposed Australian IT Licensing

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Westpac Opposes Proposed Australian IT Licensing

September 05, 2014
By David Delony, Contributing Writer

The Australian bank Westpac has testified to the government that a proposal in the country to license IT providers could hamper innovation, according to IT News.

The proposed law would require third-party financial IT service providers would have to be licensed by the government. Other provisions include the mandatory notification of data breaches and an update to the country’s security strategy.


Westpac submitted its contributions to second range of recommendations that are known as the Murray Report.

The bank is opposed to the licensing provision, saying that it would impact commercial offerings and hamper new companies coming into the market. In Westpac’s view the Australian Prudential Regulation Authority (APRA) regulations, CPS 231, are adequate.

"In Westpac’s view, the requirements of CPS 231 are pragmatic and appropriate in applying only to APRA regulated entities for outsourcing arrangements involving material business activities,” the bank said. “A broader application of these requirements has the potential to impact on efficiency, given the scale of providers that could be brought within the framework.”

Westpac claims over 10,000 outside suppliers and that they all understand the current regulatory framework.

If the proposed law goes through, it would mark a major change in how governments dealt with software providers. Financial software providers would have to be licensed the way civil engineers are. The logic behind it is similar, as a major software bug can wreak havoc with the international financial system and do as much damage to the world economy, just as a faulty bridge or other building can endanger lives.

Historically, the technology industry has adopted a libertarian approach, with companies opting not to seek any kind of licensing with governments leaving software providers alone in turn. But as software plays an increasingly important role in important systems like finance, regulators want to make sure the people writing the code know what they’re doing.

Other countries and companies will no doubt be watching to see what Australia does.




Edited by Alisen Downey

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