As part of the federal government’s move to try and speed up the flow of credit (including repealing the responsible lending obligations of lenders), the Treasury has now announced that it will be looking at updating the Consumer Data Right (CDR) to incorporate new rules.
In its most recent update on the CDR evolution, the Treasury outlined that it will soon release for consultation new draft rules that broaden the information that can be shared under the scheme, which may speed up loan assessments.
Following stakeholder engagement, the Treasury is set to put forward new draft rules for consultation that would allow consumers to share certain ‘insights’ obtained from CDR data, such as their identity, their account balance, income level and expenses, with other parties.
In an update, Treasury said: “[T]this will facilitate a safer and more efficient way to confirm details to support a loan assessment, minimising the need for an applicant to manually collect certain information and provide it to the credit provider, or even worse, provide their bank account password to the provider in order for the provider to ‘screen scrape’ that information.”
The Treasury will also soon consult on proposed changes to the CDR rules that would enable a consumer to give their “trusted advisers” – such as mortgage brokers – access to CDR data.
A third update to CDR rules is also set for consultation soon, which would enable an Accredited Data Recipient under the CDR to sponsor other parties to become accredited (or allow their agents to participate in the system).
In an update, Treasury commented: “The intent of the rules is to provide a safe, convenient and efficient way for consumers to consent to an accredited person sharing their data with trusted advisers, support consumer convenience and reduce the costs of accreditation for smaller participants and start‑ups, without reducing the overall security and privacy protections of the regime.
“These proposed changes will unlock a range of data‑driven products and services that will help consumers, including small and medium-sized businesses, to benefit from their financial data, reducing time and effort in managing their financial affairs and providing a more secure framework to share their banking data with their trusted advisers.
“For example, this will:
- enable an individual or small business using online accounting software (Accredited Data Recipient) to consent to the platform securely sharing financial data obtained from their bank with their accountant or BAS agent (‘trusted adviser’) to complete their tax return;
- enable a person to conveniently and securely share their banking data to a residential mortgage broker to help find them the best mortgage to purchase a property; and
- enable a person to securely share their financial data with their lawyer to support a more streamlined process for a legal property settlement in a family court proceeding.”
Treasury added that its Data Standards Body will start engaging stakeholders and members of the CDR community to develop supporting standards “in the coming weeks”.
Updates to joint account holder rules
The Treasury is also now seeking informal feedback on proposals to update the CDR rules so that instead of waiting for both parties of a joint account to ‘opt in’ to share their CDR data, the default would instead be to ‘opt out’.
For example, one option could be that if a banking joint account enables each joint account holder to transact on the account without requiring consent from the other account account holder, they would also be able to authorise the sharing of account data by default unless one or both account holders choose to opt out of data sharing.
“This proposed change has the potential to reduce significant friction and enhance consumer experience by aligning CDR data sharing consent requirements more closely with the existing permissions and consents between joint account holders in operating a joint account,” Treasury said.
Given the proposal to change the CDR rules on joint accounts, the Treasury has outlined that the banks will be given an extension to comply. Banks were originally expected to be complying with the joint account requirements from November 2021. However, new compliance dates will now be set following consultation.
The deadline for stakeholder feedback on the joint account changes is 26 May.
Feedback received will then inform the development of the draft rules and standards around this, which will then be released for formal consultation (expected to be “in the coming months”).
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.