The Australian Government has instigated a “reset” of the country’s Consumer Data Right (CDR), citing the cost of implementation as an impediment to adoption.
The Albanese Government has opened a consultation on changes to consent and operational rules, with the proposed changes intended to streamline consent for consumers, by enabling them to provide multiple consents in a single action.
It has also stated its intention to expand CDR to non-bank lending in early 2025, with a view to making it operational by mid-2026.
These are part of the government’s plan to “build a CDR framework that better serves consumers”.
In an address to the Committee for the Economic Development of Australia, Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, said: “The CDR has the potential to be a transformational piece of economic reform and drive better outcomes for consumers.
“However, the design of the CDR established by the previous government is not delivering. It’s a good idea, badly executed.”
Jones has written to the chair of the Data Standards Body to “secure alignment with our direction for the CDR”.
The government also released the findings of an independent review of CDR compliance costs conducted by Heidi Richards, which concluded that the regulatory costs of implementing the CDR on its current track are “substantial”.
“The costs massively exceed original estimates,” said Jones in his address.
“There is an acute burden for small customer-owned banks – particularly in the ongoing investment required into compliance costs for standards and rules changes.”
He committed to improving the experience for small businesses after receiving feedback that data holders, “often the banks”, have “made it difficult for businesses to access their own data”.
“So, we will make it an obligation on these data holders to provide a simple process for businesses to be able to access their data,” Jones added.
“And we will also make it easier for banks to use data shared via the CDR, in recognition that banks handle this type of data every day.”
Consumer finance and borrowing, energy switching and accounting services to small businesses have been identified as the highest-priority use cases in Australia.
In his speech, Jones revealed he has asked Treasury to advise him over the next 12 months on “a way forward” for a full and formal ban of screen scraping.
He delivered his address ahead of the Australian Senate’s vote on the Action Initiation Bill on 14 August.
Industry reaction
Rehan D’Almedia, chief executive officer of FinTech Australia, wrote on LinkedIn: “This is the most clarity we, as an industry, have had on the CDR the past 12 months. Not only will it help the sector maximise the impact of their policy for consumers and eventually cost-of-living pressures, but it also gives investors in fintechs tied to the CDR some certainty.”
He added: “A firm timeline from government indicating their agenda for different parts of the CDR would consolidate momentum here, and again help everyone in the industry work towards the best outcomes for this policy.”
Jill Berry, chief executive officer of Adatree, posted on LinkedIn that CDR has “momentum” and called the updates positive.
“Operational enhancements are happening, including streamlining consents and making business consents digital. The last one has been a pet peeve of mine when I first brought it to Treasury in June 2021! Glad there is traction with this since business data will continue to accelerate quickly,” she wrote.
Michael Blyth, general manager for policy and advocacy at Arca, whose members include 14 of Australia’s largest banks, as well as mutual banks, consumer finance companies, fintechs, and credit reporting bodies, said Minister Jones had “hit the nail on the head”.
“The CDR has significant potential but hasn’t been providing bang for buck.
“We are pleased the Minister has identified that consumer lending is the highest priority use case, and recognised that changes need to be made to allow lenders to use the Consumer Data Right to provide credit more efficiently and responsibly,” Blyth added.
“We agree that the use of screen scraping needs to cease – however, the current limitations of the CDR means that it remains necessary for many credit providers. [The] announcement opens up a pathway to allow for this change, and we will work with our members on how we make transitioning away from screen-scraping achievable.”
On LinkedIn, Dan Jovevski, founder and chief executive officer of WeMoney, said that “the clear message is there is great support for the CDR with clear value being created already, with further potential to expand benefits to consumers”.
NextGen’s chief customer officer Tony Carn said it supports the CDR announcement, which outlines concrete changes that will benefit consumers, lenders and brokers.
“In particular, the enhancement to consumer safety, with the direction of a full and formal ban of screen scraping,” Carn added.
Last month, the Australian Banking Association released the findings of a review it commissioned Accenture to undertake, with the aim to understand how Australians are using CDR.
The review concluded that the regime “isn’t delivering for customers” and is negatively impacting competition in the banking sector, despite significant investment by the country’s banks.
Further reading: Australia’s CDR shows signs of ‘maturing’ as use cases added
