The federal government has set aside $44.6 million over the next four years for the new Consumer Data Right (CDR) scheme, which will underpin Australia’s shift to open banking.
CDR aims to give Australian consumers greater control of their data, allowing them to more easily share transaction, usage and product data with service competitors and third party comparison tools.
Around half of the funding will go to the Australian Competition and Consumer Commission, which will lead the implementation of the new data right. The ACCC described CDR as “fundamental” to competition and consumer reform.
The consumer watchdog will receive $20.2 million to develop rules and an accreditation scheme, as well as approving technical standards and taking an enforcement role to ensure compliance. The ACCC will also develop an “address book” of accredited parties.
“This new right will improve consumers’ ability to compare and switch between goods and services on offer,” said ACCC Chairman, Rod Sims.
“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.”
The Office of the Australian Information Commissioner (OAIC) will receive $12.9 million to handle the potential privacy issues. The privacy watchdog will also work with the ACCC to establish rules for regulators.
A Data Standards Body, hosted by the CSIRO’s Data61, which will lead development of technical data standards.
“We look forward to working closely with the Office of the Australian Information Commissioner, Data Standards Body and industry to ensure the successful implementation of the consumer data right,” said Sims.
Open banking test
The data right underpins Australia’s move to open banking, which will begin next year. Under an open banking scheme, customers regain control of their banking data and are able to have it transferred between institutions and to approved third parties.
Open banking advocates argue the new system promotes greater competition and innovation in the banking sector, while critics argue questions remain over cyber security as data becomes more portable.
According to the ACCC, its the first application of the new data right and will be implemented in three phases;
- data on credit and debit card, deposit and transaction accounts available by July 2019;
- data on mortgages will be available by February 2020; and
- data on remaining products will be available by July 2020.
NAB has welcomed the governments commitment to open banking but also flagged its “complex and challenging” implementation.
“We look forward to working with the ACCC, the Office of the Australian Information Commissioner and Data61 through the process of implementing the regime to make sure we get this right for customers,” said NAB Chief Operating Officer Antony Cahill.
“Our focus must be on ensuring this change is implemented in an appropriate manner and that speed isn’t prioritised over safety; this is critical to ensuring the long term success of the regime and maintaining customer trust.”
If the new consumer data right can successfully facilitate open banking, it is expected to be applied to other sectors and the ACCC will advise the Treasure on which sectors should next. Currently the energy and telecommunications sectors are being considered, according to the ACCC.