The government is resetting CDR

CDR, as described by the government is “an opt-in service, giving you the choice about whether to share your data, with full visibility of who it’s being shared with and the purpose for sharing it.”

This allows for an easy means of comparing products and services, accessing better value and improved services, and assisting financial and cash flow management.

For bank customers, this creates a means for identifying better products or services that best suit specific needs.

After what was identified as “poor execution” in the initial attempt, the CDR is being “reset” through four key changes:

1. Opened consultation on changes to consent and operational rules. The proposed changes will streamline consent for consumers, by enabling them to provide multiple consents in a single action.
2. Released the Heidi Richards report, Consumer Data Right Compliance Costs Review, which found that the regulatory costs of implementing the CDR on its current track are substantial.
3. Written to the chair of the Data Standards Body to secure alignment with our direction for the CDR.
4. Signalled the intention to expand CDR to non-bank lending in early 2025, making it operational by mid-2026 to provide a sufficient transition period.

Speaking to the Committee for Economic Development of Australia, Assistant Treasurer and Minister for Financial Services Stephen Jones highlighted how data is crucial in the modern economy.

“The digitisation of the economy has fundamentally changed our world,” he said. Financial transactions are done almost exclusively online at a time and place of convenience.

“Data is the indispensable commodity of the digital economy. But consumers need to be able to trust that government and business will protect their data and keep it secure. There is a whole‑of‑government effort to ensure that consumers get the benefits that come from the digital economy – while ensuring that the rails of modern commerce are safe and secure.

“Privacy concerns are front of mind for Australians given episodes of cyber crime, data breaches, frauds and scams. Which is why we are looking at the way businesses store data. What data they collect, why they collect it and how/how long they store it. The review of the Privacy Act seeks to bring it into the digital age. It will bring higher standards on business to ensure they are keeping customers’ data safe.”

A key challenge that the government is hoping to mitigate in this second attempt at implementing CDR is cost-effectiveness.

“The CDR has potential to deliver real economic transformation. But the former government’s poor execution means it costs too much for businesses to implement, so too few have taken it up,” said Jones.

“The Government will resolve these issues to ensure Australians can unlock the value of their data.”

Through addressing what kept costs high, adjusting consent and operational rules, improving the experience for small businesses, and making data sharing easier for banks, there are hopes this time, the uptake will be more effective.

FinTech Australia CEO Rehan D’Almeida commented on the announcement, recognising the potential for increased competition that could translate to better outcomes for consumers.

“We welcome the news that the CDR’s rollout will continue with the next few milestones being the streamlining of consent flows, the introduction of action initiation and rollout into the energy sector. A big part of our purpose at Fintech Australia is to support increased competition. The CDR is a key mechanism for achieving this. It’s a cost-of-living initiative that will improve competition in Australia and help drive down prices of services,” said D’Almeida.

“This week WeMoney revealed that Australians using its platform – powered by the CDR – are saving on average $333 per month from bespoke financial and budgeting guidance offered by its platform. This is just one clear example of how the CDR can help the everyday Australian.

“This is the most clarity we, as an industry, have had on the CDR the past 12 months. Not only will it help the sector maximise the impact of their policy for consumers and eventually cost of living pressures, but it also gives investors in fintechs tied to the CDR some certainty.”

While there is hope that the implementation will be better for consumers, the government needs to avoid falling into the same trap as it did the first time around.

“Arca recognises the important changes to the Consumer Data Right (CDR) announced today, which if properly designed will benefit both consumers and credit providers,” said Michael Blyth, general manager for policy and advocacy at Arca.

“Minister Jones has hit the nail on the head. The CDR has significant potential but hasn’t been providing bang for buck. We are pleased the Minister has identified that consumer lending is the highest priority use case, and recognised that changes need to be made to allow lenders to use the consumer data right to provide credit more efficiently and responsibly.”

Through this focus on CDR, Jones urged organisations to move away from screen scraping, saying that the “industry can do better”.

“I have asked Treasury to advise me over the next 12 months on a way forward for a full and formal ban of screen scraping,” said Jones.

“If businesses continue to ask consumers to share their bank passwords, putting them in harm’s way, it is only a matter of time before it has a severe consequence.”

Blyth agreed that screen scraping has had its day: “The use of screen scraping needs to cease, however the current limitations of the CDR means that it remains necessary for many credit providers.

“This is an encouraging step in the right direction, and acknowledges the work being done by the industry to improve the system.”

[Related: Credit reporting framework review underway]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

To reach Jack, email him at: This email address is being protected from spambots. You need JavaScript enabled to view it.