12 January 2021

Future Directions for Consumer Data Right Report Released

This article was written by Roslyn Hinchliffe, Max Allan and Scott Farrell.[i]

The Australian Government has released the report of the Inquiry into the Future Directions for the Consumer Data Right (CDR).  The Inquiry has made 100 recommendations covering a broad range of issues to enhance the CDR’s functionality and leverage the CDR to support the development of Australia’s digital economy.  With Australians relying more on digital interactions and using and sharing more of their data, addressing these issues has become more important than ever. The report provides an extensive guide to how enhancements in the CDR can make our digital economy more effective, inclusive and safer for use by Australian consumers, and develop an innovative, productive and competitive data ecosystem.

This Alert sets out:

  • What is Australia’s Consumer Data Right?
  • What was this Inquiry about?
  • What are the recommended Future Directions?
  • What could it mean for Australian consumers and businesses?
  • What to do next?

The Report can be found here and the media release here.

What is Australia’s Consumer Data Right?

The Consumer Data Right (CDR) is a general right created for consumers to control their data, including who can have it and who can use it.  The CDR creates a new data economy in Australia and plays a significant role in supporting Australia’s digital economy.   It gives customers the right to require that information which they already share with a business be shared with someone else that the customer chooses to trust.  The CDR has started with banking, where it is called Open Banking, and work is underway for its commencement in the energy sector.  More sectors will follow until the CDR forms a single customer-driven data sharing framework across the Australian economy.  More on the CDR can be found here and here.

The CDR regime is still evolving.  The regime was recently updated to permit the use of intermediaries.  There have been various consultations including for restricted accreditation levels for data recipients, data sharing with certain non-accredited persons, and to transfer regulatory responsibility for the CDR rules to Treasury.  It is in this context that the Inquiry into the Future Directions for the Consumer Data Right has made its recommendations.

What was this Inquiry about?

The Inquiry was tasked with looking at how the CDR could be enhanced and leveraged to boost innovation and competition and support the development of a safe and efficient digital economy, benefiting Australians and Australia. The Terms of Reference required the Inquiry to make recommendations to the Treasurer on options to:

  • expand the functions that the CDR can perform;
  • ensure the CDR promotes innovation in a manner that is inclusive of the needs of vulnerable consumers;
  • leverage the CDR infrastructures to support the development of broader productivity-enhancing standards and a safe and efficient digital economy; and
  • leverage the development of the CDR with other countries that are developing similar regimes, to enhance opportunities for Australian consumers, businesses and the Australian economy.

The issues paper for the Inquiry (found here) provided some examples of issues that the Inquiry was to consider. This included adding ‘write’ access to the CDR, using the CDR to facilitate switching of services, improvements in consent and consent management, enhancing the CDR ecosystem, linkages with other processes in our digital economy and further consumer protection measures to promote the inclusion of different consumers with potentially diverse needs.

What are the recommended Future Directions?

The Report describes four broad future directions for the CDR:

“Towards data-empowered consumers – Functionality of the CDR should be expanded to deliver more convenience to consumers. The CDR should, for example, allow consumers to authorise others to digitally initiate actions, such as switching providers and initiating payments, and provide certainty to consumers through CDR dictionaries and improved consent management.

Towards economy-wide foundation – Broader participation in the CDR should be encouraged to create more choices for consumers. It should foster new ideas through innovative data sets and interoperability.  Growth of opportunities to use the CDR to compete for customers should be encouraged through flexibility in sector assessments and reciprocity in sharing. 

Towards an integrated data ecosystem – Specialisation and cooperation within the CDR should be enhanced, and interaction with the digital economy opened up, to create a data ecosystem which gives confidence to consumers. The CDR should allow trusted advisers to participate and enable graduated accreditation.  Its infrastructure and standards should be leveraged for wider application.

Towards international digital opportunities – Connections with similar overseas frameworks should be pursued to provide broader choices for Australian consumers and opportunities for start-ups and digital businesses. Australia should be at the forefront of the cross-border progress in consumer-driven data frameworks.” [ii]

This is set out in the following diagram:

Beyond data sharing Towards data-empowered consumers Beyond open banking Towards an economy-wide foundation Beyond Australia’s borders Towards international digital opportunities Beyond a standalone system Towards an integrated data ecosystem Action initiation Enhanced safeguards Payment initiation Meaningful consents Simplified switching Consent management Inclusive ecosystem International linkages Customer authentication Leveraging standards Regulatory efficiency Cross-sector opportunities Action initiation The report recommends that the CDR should be expanded to enable appropriately accredited entities, with a consumer’s consent, to initiate actions beyond requests for data sharing. This includes opening, managing and closing relationships and products. The recommendations include how this should be implemented, the accreditation, consent and notification requirements, the scope that actions can take, and the allocation of liability for them. Enhanced safeguards The report recommends additional consumer safeguards be provided as the CDR’s functionality expands to ensure consumers benefit, and their rights are protected. Recommendations include remedies for unauthorised action initiation, an obligation for action initiation to be conducted efficiently, honestly and fairly, additional privacy considerations and methods of ensuring consideration of the needs of vulnerable consumers. Payment initiation The report recommends that the CDR should be expanded in the banking sector to include action initiation, including both payment initiation and general action initiation. The recommendations include the scope of the requirements, functionality required, the interoperability with existing payment infrastructure and principles for cost and liability allocation. Meaningful consents The report recommends that consents for the use of CDR data should be made more meaningful for consumers. Recommendations include the creation of a non-exhaustive dictionary of common terms used in consents (including purposes) and the facilitation of the development and endorsement of standardised consents. Simplified switching The report finds that the CDR (including the recommended enhancements) can help overcome behavioural and practical barriers to convenient and efficient switching between products and providers. The report recommends that analysis and comparison of all available products, including bundled products, should be enabled by the CDR. Consent management The report recommends that consent management services for consumers should be facilitated. Recommendations include the secure sharing of consent and authorisation data, limited action initiation in relation to that data and further consideration of the related privacy issues. Inclusive ecosystem The report recommends CDR should support the specialisation of services to allow businesses to design their own business models, promote innovation and support a safe and efficient digital economy. Recommendations include risk-based calibration of accreditation requirements and sharing with otherwise-regulated trusted entities. International linkages The report recommends that the CDR should be developed for greater interoperability with international data portability regimes. Recommendations include streamlined accreditation to recognise overseas regimes, and mutual recognition, where appropriate. Specific jurisdictions are identified for initial international efforts. Customer authentication The report recommends that the customer authentication be enhanced as the CDR expands. Recommendations include the authentication needed for action initiation and payment initiation, the use of interoperable authentication solutions based on international standards, a minimum authentication standard which supports interoperability and flexibility and support for consumer-directed sharing of Know Your Customer outcomes. Leveraging standards The report recommends that the data standards infrastructure of the CDR should be leveraged for wider use. Recommendations include its availability for other data sharing initiatives, the facilitation of voluntary data sets and the use of open international standards. Regulatory efficiency The report recommends that the standards, accreditation, and other CDR frameworks can be leveraged to apply to other regulatory regimes where similar data protections are required. Recommendations include the availability of a ‘data safety licence’ and supporting register and the alignment of data safety accreditations. Cross-sector opportunities The report recommends the development of cross-sector opportunities for the CDR for the benefit of consumers. This includes including sectors initially for product reference data only, clarifying the obligation of accredited entities to share data at consumers’ request and the development of an integrated CDR road map.

The report notes that the original principles of the CDR remain fundamental: the CDR should be consumer-focused, encourage competition, create opportunities and be efficient and fair.  These principles were developed through the open banking review, more on this can be found here.

What does this mean for Australian consumers and businesses?

The Report states that the future CDR should provide real benefits to Australian consumers.  For example, it notes that consumers should be able to safely use digital services that:

  • notify them which of their bills are due, arrange for bills to be paid at the best times, and move their money between their accounts to minimise interest costs and fees
  • advise them in real time which services and plans are best for them, switch them onto those services and plans, and provide reports on the money saved
  • give them an up-to-date dashboard showing who they are sharing data with, how it is being used, and allow them to change those things, or make the sharing stop.

The report also notes how the future CDR should enable consumers suffering hardship to find more effective help. 

For Australian businesses, including start-ups, the report notes that the future CDR should provide ‘the clarity, certainty and consistency needed to invest in Australia’s digital economy’.  Through this should be created ‘a sustainable, robust and resilient foundation for Australian consumers and businesses to engage with, and safely benefit from, the exchange of data and the increased productivity it supports.’

What to do next?

Australia’s CDR is becoming a world leading consumer-driven data sharing framework.  The Report shows how its enhancements can develop Australia’s digital economy and provide opportunities for growth and productivity beyond banking, the initial sector of its application.  For businesses large or small that are digitally-driven, or who serve customers that are digitally-driven, the potential to be part of Australia’s growing data ecosystem should not be missed.

Contact us if you want to know more.

 

[i] Scott Farrell led the Australian Government’s Inquiry into Future of the Consumer Data Right.  However, this article is co-written by him solely in his capacity as a partner of King & Wood Mallesons.

[ii] This expression of the four directions is taken directly from the foreword of the Report.

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