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Where next for the Consumer Data Right?

Unpacking the Treasury recommendations for the future of the Consumer Data Right and what this means for Australians.

Firstly, what is the Consumer Data Right?

Last year the Consumer Data Right (CDR) officially went live introducing open banking to Australia. This means that Australians can now securely share some of their banking data with certain companies that have been accredited to receive it. At this stage these "accredited data recipients" have read-only access to the data. This means that they can access the data, provide consumers with insights about the way they spend their money and help them better understand their products and services, but they cannot modify anything or make payments.

What could the future look like?

While this first stage of CDR is incredibly beneficial, and we are off to a good start, the open banking journey in Australia has only just begun.

The good news is that the Treasury ran a consultation looking at what else could be achieved through the CDR. In essence, what the CDR could look like in the future. The inquiry, which was led by KWM partner Scott Farrell, took into account 73 formal submissions and resulted in 100 recommendations.

Here at Finder, we're very excited about the potential benefits of the CDR and we did a comprehensive submission to this consultation to share our views. Our top recommendation was to expand the functionality of the CDR to enable frictionless account switching and payment initiation. This would allow for the CDR to not only empower Australians to take control of their personal data but also enable them to quickly use this information to take action and make better financial decisions.

So what did the Treasury recommend and what does this mean for Australians?

Scott Farrell and his team made over 100 recommendations, and came out strongly in favour of introducing "action-initiation" to the CDR.

This means that accredited data recipients would be able to take action on behalf of customers.This action could include switching providers, making payments, product applications and updating details. This is an important change. As we made clear in our submission, the current read-only version of the CDR gives people powerful insights on the way they spend money, but it is action-initiation that gives consumers the power to act on these insights quickly. Without write-access, a consumer would still have to go through the same slow process to change providers or make/cancel a payment. Allowing consumers to take action through the CDR will help millions of Australians make better financial decisions.

The final report provides a good example of how this type of data and technology might be utilised in the future. Action-initiation CDR could be used to make moving house a far more seamless experience. Imagine changing your address for all your providers with just a few clicks, and opening new accounts with providers where required. This is the future made possible through these new proposals.

When will these changes come into effect?

Even though these are Treasury recommendations, they still need to be approved by the government before they become a part of the CDR legislation. In the original open banking report that led to the CDR back in 2017, the government agreed to the recommendations from the Review and set out a timeline for introducing the reforms. At the time of writing there is no indication as to when these changes may be introduced, but it does seem likely that the recommendations will be accepted by the government sooner or later.

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