Treasury proposes CDR changes for non-banks

The Australian government has unveiled a set of proposed changes to the Consumer Data Right (CDR), extending its scope to cover the non-banking sector.

The CDR framework, already operational in the banking and energy sectors, empowers consumers to grant accredited third parties access to their financial and energy-related data.

Originating with major banks, the CDR’s reach has progressively expanded to encompass non-major financial institutions and energy providers.

Treasury has recommended that the CDR be extended beyond banking and energy to include the non-bank lending sector, following delays in the process after concerns it was expanding too quickly.

The non-bank lenders sector was designated as subject to the CDR on 21 November 2022, however the roll-out is now being pencilled in to start from November 2024 and to continue in tranches before completing by November 2024.

The expansion is expected to facilitate more informed consumer engagement with both banks and non‑bank lenders, leading to improved financial outcomes for individuals and businesses.

What will be included?

The Treasury has outlined its intent for non-bank entities to participate in data sharing, encompassing a wide range of financial products and transactions, including:

• Personal credit or charge card accounts
• Business credit or charge card accounts
• Residential home loans
• Investor home loans
• Mortgage offset accounts
• Personal loans
• Business finance
• Investor loans
• Lines of credit (both personal and business)
• Overdrafts (both personal and business)
• Asset finance (including leases)
• Consumer leases
• Reverse mortgages
• Buy now, pay later services

Even data from closed accounts, such as transaction information for accounts closed within the last 24 months, is anticipated to fall under this umbrella.

Approximately 1,500 non-bank lenders that have resident loans and finance lease balances are set to fall under the expanded scheme, categorised into 'initial' and 'large' providers.

Initial providers will include non-banks whose total value of their resident loans and finance leases are over $10 billion for the calendar month preceding that day (and averaged over $10 billion during the 11 previous calendar months) and who is a data holder of non-bank lending sector data.

A ‘large provider’ is a non-bank that has over $500 million, but less than or equal to $10 billion, in resident loans and finance leases for the calendar month preceding that date; and has averaged over $500 million, but less than or equal to $10 billion, in resident loans and finance leases over the 11 previous calendar months. They will also have more than 500 customers.

Smaller lenders, while not mandated, will be offered the choice to voluntarily share data through the Consumer Data Right (CDR) platform.

Meanwhile, certain non-bank entities, like Liberty Financial, have already been granted accreditation as data recipients.

Action initiation a key element

The proposed changes focus primarily on consent-related modifications, alongside improved user experience, transparency, and data management in the CDR framework.

Among the enhancements outlined in the Treasury’s design paper is the potential for CDR action initiation to facilitate various tasks such as fund transfers, service provider switches, and personal detail updates.

As with the current regime for data sharing, obtaining informed consumer consent for action initiation will continue to be a critical element of the CDR.

The design paper seeks stakeholder feedback on key changes to Consumer Data Right (CDR) Rules. Proposed changes cover various areas, including:

• Consent bundling: Current CDR Rules prohibit combining consents with other agreements. The proposal allows accredited data recipients (ADRs) to bundle consents if needed for the requested service.
• Key consent terms: Revising requirements for active selection of consent terms addresses concerns of misleading choices necessary for service.
• Withdrawal of consent: Suggests moving withdrawal instructions from consent flow to CDR receipt and 90-day notification for clarity.
• Notification enhancements: Proposes refining CDR receipts and 90-day notifications to provide more relevant information.
• De-identification consent: Feedback sought on de-identification and deletion processes for CDR data.

By refining these areas, the Treasury seeks to strike a balance between facilitating efficient processes and ensuring transparency and user choice.

To facilitate a comprehensive understanding of these amendments, the Treasury has organised stakeholder forums from 6–15 September.

Stakeholders are encouraged to contribute their insights until 6 October 2023.

These amendments to the Competition and Consumer Act 2010, if passed, would enable consumers to instruct third parties to initiate actions on their behalf, aligned with their consent and preferences.

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