Consumer Data Right: It's time for progress

What is the CDR? In a nutshell, it enables consumers to give trusted advisers and businesses that are accredited data recipients – the latter designated by the Australian Competition and Consumer Commission – access to their data.

CDR is designed to make doing business with institutions, including banks, easier and more personalised, because the data can be used to identify the products and services that best fit consumer needs.

It's a consumer-controlled opt-in and opt-out system. Consumers can withdraw their consent for businesses to use their data at any time, and can control the type of data that is shared, who it is shared with, and what it is used for.

CDR will not just work in relation to consumer banking data. The intention is to enable other sectors that hold consumer data and which demonstrate strict levels of control to also make that data available to consumers and their trusted advisers. The goal of all of this data sharing? To empower consumers to make better product and service consumption choices, and streamline their interactions with participating organisations.

Accountants as trusted CDR advisers

Accountants were originally excluded from the CDR system, but advocacy efforts by the Institute of Public Accountants and other professional bodies helped get the addition of a Trusted Adviser category included in the CDR rules.

These advocacy efforts by the IPA and other stakeholders enabled government recognition of the work accountants already do handling sensitive data, and the strong code of ethics that requires them to keep that data secure.

The CDR rules that designate accountants as trusted advisers say that if you’re a member of one of the three accounting bodies, meaning you have ethical frameworks and education requirements built into your membership, your client can grant you access to their CDR data.

When CDR data is transmitted to the accountant, for example via the usual range of accounting software, it becomes normal accounting data that must be managed in the same way that an accountant would manage any client data.

One of the problems with CDR is that relatively few people, including consumers and accountants, are familiar with the ins and outs of the program. As such, the benefits aren’t easy for everyone to see at this stage.

The recently announced Budget investment in CDR offered little detail, but a follow-up call from Treasury with stakeholders revealed more.

CDR: Treasury’s investment focus

The Government said one focus of the new investment is to develop a trusted brand around CDR, so consumers can clearly identify businesses providing CDR-enabled products and services.

There is a great deal of marketing to be done to build trust in CDR, particularly after so many recent, high-profile data breaches.

Other desired outcomes for the investment include:

Strengthening the CDR framework, to make it more secure: Recent data breaches in various sectors have drawn attention to concerns around the security of data. Security has always been important, and now the communication of security credentials is as well – what may have once been considered secure is no longer so. 

Driving participation in banking and energy: Banking and energy are the two headline sectors selected for the CDR opening act. Other sectors previously earmarked, including insurance, superannuation, and telecommunications, have been put on hold. Their participation will be reassessed in late 2024. Treasury also mentioned a third sector that is still going ahead – non-bank lending – without detail or timelines around this.

Providing more efficient sharing of data: What does efficient data sharing look like in real time? Consider the open banking apps, such as Frollo, that are available right now. They can be used to compare market products in banking, insurance, energy, telcos, and more.

Users who give open banking apps such as Frollo access to their investment products, bank accounts and term deposits, can then use the open banking app to see their financial position, with their account balances all in one place.

This visibility has its limitations. For example, the user doesn’t always get a true real-time view of their total financial position as some open banking apps still use screen scraping data in combination with real-time CDR data.

The functionality is not in place for transactions yet, either. If the user wants to move money from bank A to bank B via a centralised app, they can’t do that, yet. And if they move house and want to change their address with all of the financial institutions they deal with, in the one place, they can’t do that, either.

The wait for these capabilities has already been significant – and consumers are unlikely to see much value in CDR until consumer functionality and trust in privacy and security of CDR is established.

While accountants currently can be asked by clients to use CDR data, this is not likely to be widespread practice – because there is little payoff for consumers to use CDR. The future, with transactional capabilities and real-time visibility, will bring CDR into the daily work of accountants.

Accountants would do well to familiarise themselves with various applications of CDR as consumers, so they have the knowledge to inform their own clients when the time comes and to advise those who are curious in the meantime.

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