Article originally published by The Advisor
A new Consumer Data Right will give consumers the right to access and share data that businesses hold about them, including mortgage and finance data.
When unveiling Budget 2018–19, Treasurer Scott Morrison revealed that the government would be pushing ahead with its Open Banking Regime and Consumer Data Right, in a bid to give small businesses and householders “more control, more choice and better deals”.
Under the Open Banking scheme, all major banks will be making data available on credit and debit card, deposit and transaction accounts by 1 July 2019, and mortgages by 1 February 2020.
Data on all products recommended by the Open Banking Review will be available by 1 July 2020.
All remaining banks will be required to implement Open Banking 12 months after the major banks.
The Consumer Data Right (CDR) aims to improve consumer choice and convenience by allowing certain authorised data to be safely shared with accredited, trusted recipients, such as comparison websites.
Consumers will be able to keep track of consents to share data and will be able to revoke them and will also have standing to directly sue if their rights under the CDR have been breached.
All entities holding banking licences (authorised deposit-taking institutions), other than foreign bank branches, will be subject to the right.
The data sets that the right will apply to are based on product type and include (but are not limited to):
- Home loans and mortgages
- Mortgage offset accounts
- Business finance
- Current accounts
- Personal loans
- Lines of credit
- Consumer leases
- Credit and charge cards (personal)
- Asset finance (and leases)
It is expected that the sharing of data could enable comparison sites to offer credit cards and mortgages with “product recommendations tailored to consumers’ actual spending and repayment patterns”.
The Treasury is currently developing draft enabling legislation for the Consumer Data Right and is expected to begin consulting on this draft in the coming months.
Speaking of the CDR, Treasurer Scott Morrison said: “Customers will be able to use their new data rights to find better deals on their credit cards, mortgages and other banking products.
“Comparison services will be better able to assess the value and suitability of all available products, taking into account the individual circumstances and needs of the customer. This will help to break down barriers that see customers staying with their banks even when there are better deals elsewhere.
“Open Banking will also allow entrepreneurs to develop new services and products tailored to customers’ needs, disrupting those existing business models within the banking sector that do not put customers first.”
The chairman of the Australian Competition and Consumer Commission, Rod Sims, welcomed the CDR, stating: “The introduction of a Consumer Data Right in Australia is a fundamental competition and consumer reform. The ACCC is delighted to lead the data right and to work in the best interest of consumers.
“This new right will improve consumers’ ability to compare and switch between goods and services on offer.
“We expect the scheme to encourage competition between service providers, leading not only to better prices for customers but also more innovation of products and services.”
Budget 2018–19 has set aside $44.6 million over four years to establish the CDR.
While CDR will be initially implemented in the banking sector, it will be later rolled across the energy and telecommunications sectors before being expanded economy-wide on a sector-by-sector basis.
To learn more about the compulsory credit data changes, read our article Compulsory credit history data to benefit home loan borrowers.