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Updated rules for expanding the Consumer Data Right to non-bank lending have been released for consultation by the Treasury.
The Albanese government has released its new vision for how the Consumer Data Right (CDR) will expand to non-bank lending.
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While the Treasury had released draft amendments to the CDR Rules to expand the CDR to Australia’s non-bank lending sector last year, the government has now released new draft rules for consultation that include stakeholder feedback and reflect the government’s recent “reset” of the regime.
The updated draft amendments include measures to limit costs to non-bank lenders and initial measures to reduce compliance costs for the banking sector – a key concern flagged by stakeholders that partly prompted the reset.
New timelines
CDR is expected to expand to non-bank lending in early 2025 and be operational by mid-2026. As such, the rules have updated timings for when the CDR obligations will take effect.
Sharing obligations for product data will apply from 13 July 2026, followed by consumer data sharing obligations in four phases from 9 November 2026 until 13 September 2027. It will begin with the largest non-bank lenders and non-complex data requests.
New de minimis thresholds
The new rules also expand and clarify the proposed “de minimis” threshold (which determines whether a non-bank lending data holder is required to implement CDR data sharing), including:
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Expanding the proposed threshold of a total value of resident loans and finance leases greater than $1 billion (compared to $500 million under the previous proposal) and including related entities of a non-bank lender.
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Extending the proposed threshold of more than 1,000 customers (compared to 500 or more customers under the previous proposal) and providing mechanisms for compliance monitoring.
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Clarifying that CDR data sharing obligations would also apply to managers of loans (also known as servicer entities) that provide credit on behalf of a non-bank lender.
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Clarifying that data holders with related entities or in white labelling arrangements may discharge each other’s obligations.
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Clarifying that a non-bank lending data holder that does not meet the threshold may choose to join the CDR by notifying the Australian Competition and Consumer Commission.
A bank or non-bank lending data holder would not be required to share consumer data if the data was in relation to a transaction that occurred more than two years before the time of the request.
Removing ‘niche’ products
The updated draft rules narrow the range of products for which CDR data sharing would be compulsory for banking data holders and non-bank lending data holders that meet the “de minimis” threshold.
The draft amendments outline that CDR data sharing would be voluntary in relation to:
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Asset finance (except for standard auto finance)
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Consumer leases
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Foreign currency accounts
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Margin loans
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Reverse mortgages.
This aims to avoid unnecessary costs and burden for data holders in relation to niche and small target products for which CDR data is unlikely to be shared at scale to support high-value use cases.
CDR data sharing would also be voluntary in relation to products for which a banking or non-bank lending data holder has less than 1,000 eligible CDR consumers. If voluntarily sharing CDR product data in relation to these products, data holders will not be exposed to civil penalty for non-compliance with the data formatting requirements of the Data Standards.
Other minor changes are included, such as aligning the deferral of CDR data-sharing obligations in respect of buy-now, pay-later (BNPL) products to the final obligation date of 13 September 2027.
Announcing the changes on Tuesday afternoon (26 November), the Assistant Treasurer and Minister for Financial Services, Stephen Jones, said: “These proposed changes will: expand CDR to non‑bank lending; remove the requirement for banking and non‑bank lending data holders to share CDR data for niche products and data that does not add significant value to consumers; narrow the scope of obligations to reduce costs for non‑bank lenders and banks; ensure the CDR targets priority use cases, such as consumer finance and lending, without imposing costs and burden on smaller lenders.
“Expanding CDR to non‑bank lending will allow consumers to share their bank data with non‑bank lenders for products like residential mortgages and car loans to get better outcomes when it comes to approvals and interest rates.
“The government has listened to feedback on the expansion of the CDR to non‑bank lending, and these changes will give consumers more ways to take control of their household finances and greater confidence that their data is being protected.
“These changes put consumers at the heart of the government’s reset of the CDR.”
Submissions will close on 24 December 2024.
The new non-bank rules are the latest evolution in the CDR reset.
Earlier this month, changes to the Consumer Data Right legislation commenced, including the ability for consents to be bundled, a simplification of requirements when asking for consents, and an expansion of the energy trial.
Following the announcement, several members of the broking and fintech industry welcomed the move, saying that the changes could accelerate the use of CDR-enabled products, including home loan applications and reprice/refinance requests.
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