What the changes to the government’s consumer data right mean for SMEs

Changes to the federal government’s consumer data right (CDR) mean third parties can now be asked to initiate actions on behalf of businesses and consumers with their consent.

One example of how the CDR can now be used under the expanded regime is to authorise an energy provider to automatically update customer details and set up a new connection once a person moves into a new address.

Another example is the use of a financial-management app to budget and make payments across all of a customer’s bank accounts, serving as a form of digital concierge to streamline everyday transactions.

Treasurer Josh Frydenberg and Minister for Superannuation, Financial Services and Digital Economy Jane Hume issued a joint statement on Wednesday announcing that the reforms have come into effect.

“The CDR was first launched in the banking sector in July 2020 to give consumers and small businesses more power over their own data to compare and switch banking products and, in the future, telecommunications and energy providers,” the ministers said.

“The government will continue to work with stakeholders to develop an integrated roadmap for the implementation of these CDR reforms,” they said, noting that these new changes were part of the government’s response to the Inquiry into Future Directions for the Consumer Data Right.

According to the federal government, it will now be easier for consumers and small businesses to make payments, open and close accounts and apply for a home loan via the expanded CDR.

Before the changes came into effect, the CDR could only be used in Australia to instruct businesses, like banks, to share the data of a consumer or business with an accredited third party. The point of the data sharing is to make better decisions about products and services or to switch between providers more easily.

This month, Treasury set about considering public input as to whether the telco sector should be included in the CDR.

“Designating the telecommunications sector would expand the CDR framework to a key sector of the Australian economy, allowing consumers to make better choices and facilitating opportunities for cross-sectoral innovation,” Senator Hume said last month.

This article was first published by The Mandarin.