Open banking CDR one step closer
In May 2018 the Federal Government committed to applying a Consumer Data Right (CDR) to the banking, energy and telecommunications sectors. On 13 February 2019 The Treasury Laws Amendment (Consumer Data Right) Bill 2019 was introduced and read for the first time in the House of Representatives.
The Bill is intended to implement the “Open Banking” CDR in the banking sector by amendment to the Competition and Consumer Act 2010. An Economics legislation Committee Report to the Senate is due by 18 March 2019, and introduction from 1 July 2019 was foreshadowed, although that might be delayed with the Treasurer recently stating that product information and IT systems would need to be ready by July 2019, and card, transaction and mortgage data would be made available by February 2020.
The CDR generally is intended to provide individuals and businesses with a right efficiently and securely to access specified data held by businesses in relation to them, and to provide public access to information on specified products that businesses offer. The objective is to give customers more control over their information, more choice in provider, and more convenient management of their money and services.
Initial introduction in the banking sector follows the 2018 Review into Open Banking in Australia, and is supported by CDR Rules being established by the ACCC (most recently a revised version of its CDR Rules Outline published 25 January 2019). Introduction in other sectors will be by designation by the relevant Minister, with the Explanatory Memorandum to the Bill stating that the ACCC will lead on issues concerning the designation of new sectors of the economy to be subject to the CDR.
The system will be regulated by both the ACCC and the Australian Information Commissioner,as it covers both competition and consumer matters, and privacy and confidentiality issues concerning the use, disclosure and storage of data.
There’s no doubt that the data economy and “Open Banking” will transform the banking/financial services sector, but who knows how with the CDR? It is of course intended to facilitate competition and increase consumer choice and welfare, but the CDR may also increase costs for some through data discrimination, for example in assessing and pricing loans.
Data security and privacy also remain concerns, and big questions abound around the increasing availability and value of banking customer data in a cashless society, and its ethical usage by the banks.