Insights / December 11th, 2018

A step closer to Open Banking – New Consumer Data Right to be introduced into Parliament

The Consumer Data Right (“CDR”) reform will allow individual consumers and small businesses to request that personal data, held by other businesses, be transferred to accredited third party data recipients. Data recipients will use information contained in the data, such as a consumer’s historical borrowing patterns, to provide services such as comparison tools. Using these tools, consumers will be able to compare prices, switch between products, and customise services to their individual needs. By providing consumers with more relevant, usage-specific information, it is expected that these tools will help consumers find lower prices, select more suitable products, and negotiate better deals with service providers.

Third party data recipients will be subject to accreditation criteria set by the ACCC, who will set privacy and information security requirements for secure handling of personal data. The ACCC will oversee the CDR reform in conjunction with the Office of the Australian Information Commissioner and a newly established Data Standards Body.

The CDR reform will be rolled out progressively across various industries. The first will be the banking industry, where it is anticipated that from 1 July 2019 consumers will be able to direct banks to share banking data on credit, debit, transaction and saving accounts with data recipients – the so-called “Open Banking” reform. Pending a successful rollout across the banking industry, the CDR will be extended to the energy and telecommunications industries, although no date is set. Over the long term, the CDR will expand to other services across the entire economy where personal data is used by businesses.

There are a number of ways in which consumers would benefit from the CDR:

  1. A consumer can use a comparison website for personal banking products, which gives product recommendations based on the consumer’s actual spending and repayment patterns.

  2. A small business can use a comparison tool to identify business lending products, which filters products based on the business’s historical borrowing needs.

  3. A homeowner can use an energy analysis tool which considers their household’s energy usage to find clean energy products, while also calculating whether investing in the product would be economical.

If you have any questions about the proposed CDR reform or how it may impact your business, please contact Hillary Ray.