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New CDR expansion to make mortgages easier

The government has confirmed it will expand the Consumer Data Right, which could make it easier for consumers and small businesses to apply for a home loan.

Since the Consumer Data Right (CDR) has been in operation in banking (starting with the major banks in July 2020 and extending to non-majors in July of this year), consumers and small businesses have only been able to use the CDR to instruct businesses, such as their bank, to share their data with an accredited third party in order to help them make better decisions regarding the products and services they purchase or to switch between providers more easily.

After releasing its official response to the Inquiry into Future Directions for the Consumer Data Right earlier this month, the federal government has now agreed to enable consumers and businesses to instruct third parties to initiate actions on their behalf (once consent is given).

In relation to mortgages, the future directions inquiry suggested: “Switching may be greatly streamlined by enabling electronic lodgement of applications in standardised forms by accredited persons on behalf of consumers and could be enabled by action initiation.”

If such a change were implemented, accredited persons may also be able to design services that offer to undertake these actions independently, or in combination with, data sharing services, it added.


Under the new move by government  - the latest tweak to the CDR (which now also gives brokers access) - consumers and small businesses will have more power over their own data to compare and switch banking products and, in the future, telecommunications and energy providers. 

For example, a consumer may consent for their financial management app to make payments across all of their bank accounts.

The government said it would continue to work with stakeholders to develop an “integrated roadmap for the implementation of these CDR reforms”.

Treasurer Josh Frydenberg commented: “The Morrison government is expanding the Consumer Data Right to make it easier for consumers and small businesses to undertake everyday tasks such as making payments, opening and closing accounts and applying for a home loan.”

A 'gamechanger' for home lending: Westpac mortgages MD

Speaking of the change, Anthony Hughes, Westpac’s mortgages managing director, said he believed that this could be a gamechanger when it comes to home lending due to the role it can play in “stripping away all the paper artefacts” of the past. 

“Once we have a majority of the data available, it’ll make a really big difference to how quickly and easily we can help a customer with their mortgage and other needs,” Mr Hughes told Westpac’s in-house publication, Westpac Wire.  

“The first wave of digitisation was really about turning physical paper into digitised paper, but frankly it was still paper.

“But the true world of digital is when the paper goes away altogether and you're automatically pulling verified data, obviously with the customer’s consent, from other sources.  

“It might be data from the Australian Tax Office, or a credit bureau, or a customer’s banking transaction accounts – and, given that data's verified, you don't need to ask for any of those old school documents that we were required to ask for in the past.”

He continued: “We've got to continue to digitise the process, end to end, in the eyes of the customers. That means getting faster, more reliable and taking the effort out for them, and then guiding them in those key moments of truth and doing that incredibly consistently.”

“If we can achieve what we’ve been able to in the last 12 months in the next two years, I think we're well on our way,” he said.

[Related: Inquiry outlines 100 ways to improve CDR]

New CDR expansion to make mortgages easier

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