Consumer data rights funding boost raises a debate over its slow uptake

The budget has thrown money at consumer data rights across banking, energy and non-bank lending sectors to make it easier to switch providers – a service that’s been slow to catch on.

ACCC chair Gina Cass-Gottlieb says the regulator has “significant tools” to enforce consumer data right rules and standards. Picture: Sam Ruttyn

The federal budget has boosted funding for the consumer data right from 2023-24, as the regime which incorporates open banking grapples with slow take-up and data quality issues.

Treasurer Jim Chalmers’ second budget allocated a further $88.8m over two years from 2023–24 to support the operation of the consumer data right across the banking, energy and non-bank lending sectors. The funding boost is also aimed at progressing the design of action initiation and uplifting cyber security.

The consumer data right facilitates a person having more control of their details and information, enabling them to share the data businesses hold if requisite permission is provided. It was touted as a way for consumers to more easily switch providers or update personal details across firms.

The rollout comes, however, as a spate of local companies have fallen victim to cyber and data breaches in the past 12 months, heightening the focus on cyber security and how long firms retain customer information. TechnologyOne became the latest ASX-listed company to reveal a cyber attack on Wednesday, joining the ranks of Latitude Financial, Medibank Private and Optus.

Tuesday’s federal budget papers said the government was continuing its consumer data right investment, with the regime to provide a “more secure way to safely share data online”.

“The CDR gives consumers an enhanced ability to control and benefit from the sharing of their data. The CDR will empower consumers to make better informed decisions and find better prices from everyday utilities to the most competitive home loans for their circumstances.”

Banks have mixed views on the consumer data right, which has failed to generate significant take up in the past three years. Among the big four, regional and second-tier banks, the lion’s share are now accredited data holders as well as recipients under the consumer data right.

The notable exceptions are Macquarie Bank and AMP’s bank which are separately accredited data holders, but not yet recipients.

An Australian Banking Association spokesman on Wednesday said the industry did not believe there was “any need” to accelerate future stages of the consumer data right.

“Government must appropriately balance speed of implementation of the program with consumer protection, including the implementation of recently announced measures to ensure a robust and economy-wide digital identity initiative,” he said.

The Mortgage & Finance Association of Australia is advocating for the increased take-up of the consumer data right, including by boosting awareness of its benefits for a number of years, and pushing for it to be broadened into areas including non-bank lending.

“We support this going ahead. We so want to see more widespread adoption within the mortgage broking industry – for the benefit of customers,” said Anja Pannek, the MFAA’s chief executive.

“CDR we think will be an exciting innovation for consumers working with mortgage brokers. It will make it easier for consumers to work with their broker – in essence removing friction around the assessment and recommendation process.”

But Westpac chief executive Peter King took aim at the domestic open banking rollout in February because few customers were engaging with it, which he said didn’t represent an efficient use of the bank’s resources.

Mr King said that of Westpac’s 14 million customers, just 9000 were opting to use the consumer data right.

The ACCC last month released a report which drew on stakeholder consultation to assess data quality within the consumer data right system.

The report said improvements to data were required, even though the quality was “generally sufficient” to support the delivery of the consumer data right.

ACCC chair Gina Cass-Gottlieb in March admitted there were challenges with data quality within the regime, urging industry to lift its game or face regulatory enforcement measures.

“Not all data holders have been able to comply fully with what is required and we expect those businesses to actively manage their CDR solutions and promptly address data quality incidents,” she said.

“In addition to educating CDR participants … the ACCC has significant tools in enforcing CDR rules and standards including compliance assessments, the issuing of infringement notices and potential court action.

“As evidenced by our busy CDR regulatory work, I hope it is abundantly clear we are not afraid to use any of these tools.”

Originally published as Consumer data rights funding boost raises a debate over its slow uptake