CDR not designed to empower the powerful: ACCC

Appearing before the Senate Economics Legislation Committee on Tuesday (5 March), Scott Gregson, the executive general manager of the Australian Competition and Consumer Commission’s (ACCC) mergers and authorisation review division, did not agree with Senator Chris Ketter’s proposition that the yet-to-be-effective Consumer Data Right (CDR) could make financial institutions with a strong foothold in the market – namely, the big four banks – even more powerful.

Under the draft Treasury Laws Amendment (Consumer Data Right) Bill 2018, individual and business consumers will be able to access their own data or direct custodians to share their data with accredited entities that have “satisfactory security and privacy safeguards” in place, such as banks, telcos, energy companies and comparison service providers.

However, Senator Ketter referred to a media report that claimed that mid-tier and mutual banks would struggle to compete with the majors, who have “the technology, scale, and sophisticated pricing capability” to be able to make the most of the data shared through the CDR system.

“I can see a campaign in the market where the mortgage acquisition teams of the big four can sharply price for better risk in a market where they want to attract more system growth,” he said.

Mr Gregson responded that, based on the ACCC’s experience, it’s the “smaller, niche, and maverick type players… that can provide the biggest competitive spur”.

“We do want competitive responses to flow from the consumer data right,” the executive general manager said.

“We do see the consumer data right as potentially assisting those – in the case of financial services, banks – to participate in the market. We’ve already seen, for example, the likes of Macquarie offering their own version of access to data to their consumers. We think they are the types of innovative businesses that will lead to better offerings.

“If anything would we see it facilitating and enhancing the capacity of others to compete.”

He further pointed out that after receiving feedback from smaller lenders, the ACCC has “facilitated the early entry of other banks” through its CDR rules, which will continue to be updated based on the needs of the market. 

Also fronting the Senate Economics Legislation Committee alongside Mr Gregson, Bruce Cooper, the general manager of the Customer Data Right branch at the ACCC, noted that the big four banks would only be able to use the data if the customer provides explicit informed consent.

“It is individual consumer-led data transfers. It’s not sucking up large volumes of data of a large number of individuals and then going ahead and targeting them,” Mr Cooper said.

[Related: Banks call for stronger CDR privacy rules]