The bright future for the Consumer Data Right: banking, energy and beyond

By James Deady

Energy is the next industry sector likely to be subject to the Consumer Data Right (CDR) system, after the banking sector, which is already subject to the CDR. In this update, our Technology & Digital Economy team brings you up to date with the latest developments and what’s to come.

The CDR so far

The CDR is a recently created statutory right, brought into law in August 2019 under the new Part IVD of the Competition and Consumer Act 2010 (Cth).

Broadly speaking, the CDR provides consumers with the right to:

• request access to specific data, including data about the consumer’s use of goods or services, which is held by a service provider; and
• direct service providers that hold certain data to share that data with other service providers (who are accredited data recipients under the CDR regime).

The intention of the CDR system is to provide consumers with better access to and control over their data, increase competition and to improve consumers’ ability to compare and switch between products and services.

Open banking

The CDR for the banking industry (also referred to as ‘open banking’) went live on 1 July 2020.

With the CDR commencing for banking, the ‘big four’ banks (as data holders) are now required to share certain consumer data with accredited recipients on request by a consumer.

To be eligible to receive consumer data from a data holder, a recipient must have gone through the Australian Competition and Consumer Commission’s (ACCC) accreditation process.  Currently, there are two accredited data recipients, however the ACCC has stated that there are at least 39 other applications for accreditation pending.  It is expected that data recipients will include fintechs, banks and other financial institutions and product comparison services

Under the CDR system, the big four banks are currently required to share consumer data relating to standard products such as savings accounts, term deposits and other personal accounts (including transaction history information, interest rates and account balances) with accredited recipients on request by the consumer.  From November 2020, this will be extended to consumer data relating to home loans and personal loans, as well as direct debits, joint accounts, closed accounts, and scheduled payments and payees.

Entities participating in the CDR regime are required to (among other things) comply with:

• the Competition and Consumer (Consumer Data Right) Rules 2020 (Cth), which provide the legal framework for the CDR generally as well as specific requirements for the banking industry; and
• the Consumer Data Standards, which are binding data standards for participants in the CDR system.

Over the next 12 months, the number of banks and other financial institutions required to participate in the CDR system as data holders is scheduled to increase.  Non-major authorised deposit-taking institutions (ADIs), including the non-major banks, building societies and credit unions will be required to comply with the CDR regime in phases, commencing in July 2021 (though they may choose to voluntarily participate from early next year).

The number of accredited data recipients participating in the CDR system is also expected to increase significantly.

In addition the ACCC is likely to finalise the rules regarding the participation of intermediaries (third party service providers that facilitate the collection of CDR data) in the open banking system.

Energy

The energy sector is the next industry in which it is proposed to roll out the CDR.

The CDR is currently planned to commence in the National Electricity Market (which excludes Western Australia and the Northern Territory) in 2021.

It is intended the CDR will make it easier for individuals and businesses to access data about them held by energy retailers and share that information with accredited recipients (to seek to enhance competition, choice and data portability in the energy industry).

As part of the rollout, the final version of the Consumer Data Right (Energy Sector) Designation 2020 (Cth) (Designation) was released on 30 June 2020 after public consultation.  The Designation identifies certain data holders – such as energy retailers, the Australian Energy Regulator and the Australian Energy Market Operator (AEMO).

The Designation details the categories of information for which data will be available via the CDR system.  The categories are broadly defined and include:

• customer and billing information;
• National Metering Identifier standing data;
• metering data (with certain exceptions);
• Distributed Energy Resource register information;
• certain information about electricity or dual fuel retail arrangements – as tailored to a particular person or as provided to a particular class of persons; and
• certain information about natural gas retail arrangements as available to new customers.

The Designation also contemplates AEMO acting as a gateway/intermediary in relation to the data sharing.

The CDR for the energy sector is still being developed.  The ACCC is currently seeking submissions on the Energy Rules Framework Consultation Paper before 28 August 2020.

Future implementation

The telecommunications and superannuation sectors have been flagged as the potential next industries in which the CDR will be implemented. There have also been suggestions that the CDR may be implemented in the insurance sector.

The rollout of the CDR into further sectors will be considered by the Treasurer in conjunction with the ACCC.

Preparing for the CDR

Organisations in the banking, energy, telecommunications, superannuation and insurance sectors should be actively preparing for the implementation of the CDR regime across their respective industry sectors.  In particular, the CDR regime will create new data access, data security and privacy compliance obligations.