Minister, The Optus and Medicare hackers have rightly freaked everyone out. And as you know, the 17 million records that have been stolen in the last month are just a drop in the ocean compared to the number of data breaches that never make it into the news. .
So today I am writing to you with a simple solution.
This basically involves locking down each Australian’s private financial information, as well as an alert that lets us know whenever someone comes near our personal details.
The government has set aside $5.5 million to investigate the hacks. However, implementing my idea will not cost the Australian people (or the government) a penny. All you need is to find a political ticker, Minister.
Let me explain.
A criminal can hack someone’s identity and then apply for credit in their name.
When the bank receives the criminal’s request, its system automatically checks the customer’s credit file. Above all, the customer does not receive an alert telling him that the bank has checked his credit file. The criminal can use this to his advantage, often logging dozens of credit card and personal loan applications as quickly as he can.
So the most logical solution would be to put a “lock and alert” system on our credit reports. In other words, lock each credit file so that no one can see it (without the customer’s consent) and send an immediate alert to the customer if someone tries to access it.
But there is a problem (or three in fact).
There are three credit bureaus in Australia (Equifax, Experian and Illion) that maintain credit records on virtually all adult Australians.
They are owned by major investors and last year they collectively made $521 million in revenue by selling our private data to financial institutions, according to IBISWorld.
The problem is that putting a lock on our credit records would put a lock on their profits. They won’t let that happen and have well paid lobbyists to make sure the government doesn’t allow it.
These lobbyists will tell you, Mr. Minister, that it is impossible. But it is possible. In fact, in America the government has already forced the credit bureaus to offer it. And in Australia the “lock and alert” technology already exists, via an app called Credit Savvy. So I suggest to you, Mr. Minister, that we require the credit bureaus to automatically lock our credit files and provide us with an alert service. This will block criminals while allowing legitimate credit inquiries.
The thing is, these credit bureaus are like Facebook. Our private data is the product they sell and their customers pay handsomely for that data. Let’s be honest: the credit bureaus’ only allegiance is to their shareholders.
Yet your allegiance goes to the Australian people whom you are honored to represent. So, we need you to look at these billion dollar companies and stand up for us. I know your worst nightmare is that one of our banks gets hacked, which some analysts (like Standard & Poor’s) suggest is only a matter of time. Right now you have the power to protect all Australians with the stroke of a pen. Are you going?
Draw your own path!
PS I have invited the minister to respond (in 140 characters or less). Here is his response: “Sounds good. We’ll take a look. Stephane.
Questions and answers
Andrew asks: I came across an article stating that Vanguard is now in the superannuation business and will compete with Australian Super and HostPlus etc. What is your opinion on this?
Barefoot answers: Yes, this week Vanguard officially launched its super fund offering.
It charges 0.58% per annum, which is one of the lowest on the market for standard default funds with balances below $50,000.
There are cheaper retirement index funds, but here’s what’s great about them.
First, Vanguard said it would look to reduce its fees over time as it grows. I tend to believe him because that’s what he used to do.
Second, it’s not your average super fund.
Research by SuperRatings found that there is “high retirement risk” for many of today’s top performing super funds. That’s because many of our largest super funds put everyone, young and old, into a single investment pot.
Instead, Vanguard’s offering is a lifecycle fund that invests your super depending on your age.
Simply put, it automatically reduces the amount of riskier assets, such as stocks, in your portfolio as you age and get closer to retirement.
In all, it makes 36 of these adjustments until your 83rd birthday (no change fees).
This is by far the most comprehensive of all Australian super deals.
So what am I thinking?
I think this is great news for all Australians whether or not you switch to Vanguard. The super funds generate a whopping $30 billion a year in fees: money that could and should be earmarked for our retirement.
Hopefully, now that one of the biggest money managers in the world – with a constant focus on cutting costs – has taken hold, it will keep everyone on their toes.
For information, I invest in some Vanguard index funds.
Barefoot Beer Cheer
Lawrence writes: I came to your Beer with Barefoot session and, wow, it was packed!
I was so excited to meet you in person and you bought me a beer and signed my book. It has been almost nine months since we lost our home and we are still struggling. I left the night with a clear plan and knowing I had help. Thank you for supporting the Lismore community, this is the lift we really needed.
Barefoot answers: It was a pleasure to meet you there. And it was a real pleasure to come to Lismore. After meeting so many people like you who have shared heartbreaking stories, I am blown away by the amazing and resilient community you have.
Many thanks to the Lismore Book Warehouse and the publican of the Metropolis for organizing such a great event!
Wise son don’t sleep
Sasha says: I gave my 10 year old son your new book this afternoon and he can’t put it down.
It’s on page 104! He won’t fall asleep until he finishes it! He says it’s amazing! Like the “little tips” and stories the most.
Maybe this book will change his life like Barefoot Investor changed mine. Thanks!
Barefoot answers: What a little champ!
And your son is not alone. We launched the book on Monday, and Monday night my inbox was full of kids (and their parents) emailing me, bragging that they had already finished the whole book. This has only happened to me once before – the day I launched the original Barefoot Investor book.
But this time it’s even better… because it’s happening with children. I said Barefoot Kids is the best book I’ve ever written, and I believe it.
So I publish it early: there is something very special in this book. Thanks for sharing, Sasha. I can’t wait to hear about the epic moneymaking adventure your son is on now!
* The information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personalized financial advice tailored to your specific needs before making financial and investment decisions.