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The government has confirmed what the expanded Consumer Data Right will look like, as it reaches into more lending segments.
The Albanese government has confirmed upcoming changes to the Consumer Data Right (CDR), following “extensive consultation” and “strategic assessment” of the future of the open banking regime to address concerns around high compliance costs and the limited uptake of use cases by consumers.
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The CDR aims to help Australian households and businesses access data held by their bank or electricity retailer and enable them to make informed choices, switch providers, and more easily apply for products and services.
While the system has experienced some teething problems, the government has been working to ‘reset’ the system to improve take-up and reduce costs for businesses. It launched a consultation on new rules for expanding the Consumer Data Right to non-bank lending, among other changes, last year.
It has now confirmed the future trajectory of CDR, which includes:
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Expanding the CDR to include non‑bank lending products in “mid‑2026” in order to promote “greater competition and innovation in the market”.
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Removing the requirement for data holders to share consumer or product data for “niche products” such as asset finance, consumer leases, reverse mortgages, margin loans, and foreign currency amounts.
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Reducing the period of data to be held and shared from seven years to two years, in a move to reduce costs associated with maintaining and responding to requests for historical data.
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Ensuring buy now, pay later products are covered by data sharing obligations.
Confirming the changes, outgoing Assistant Treasurer and Minister for Financial Services, Stephen Jones MP, said: “The Albanese Government is uplifting the Consumer Data Right by expanding the system to non‑bank lending providers to deliver a better deal for more Australians.”
He said that by removing the inclusion of “niche products” and instead focusing on “priority use cases” such as consumer finance and lending, the regime would avoid “imposing unnecessary costs and regulatory burden on smaller lenders”.
He said: “The government’s changes will open opportunities for consumers to use the CDR to find the best deals on more lending products. It will also address the cost burden of the CDR on the financial sector.
“By unlocking the value of a consumer’s data, the CDR has the potential to be a transformational piece of economic reform for Australian consumers, delivering more choice and access to the best possible deals on a range of financial products tailored to a consumer’s individual need.
“The Government’s changes will open opportunities for consumers to use the CDR to find the best deals on more lending products. It will also address the cost burden of the CDR on the financial sector.
“The Government is working closely with stakeholders and will continue to expand the CDR in ways that foster innovation, while being purposeful and focused on consumer benefit.”
The problems with open banking
While the open banking regime has been in place for years, it has been beset by issues.
According to data from Perth-based fintech Moneycatcha, for example, 86 of the 88 banks reviewed had data quality issues with at least one home loan product and 97 per cent of Australian banks could improve at least one aspect of their open banking data disclosures under Australia’s Consumer Data Right (CDR).
In its report, titled Digging Deeper to Unearth Open Banking’s Hidden Gem: An updated Product Reference Data scorecard, it was revealed the vast majority of banks are still beleaguered by data errors.
The top five data quality issues related to fundamental mortgage attributes were as follows:
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Loan-to-value ratio (LVR)
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Interest rate
- Repayment type
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Loan purpose
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Loan amount
Given the issues, the fintech referred 1,431 products to the Australian Competition and Consumer Commission (ACCC), in some cases, more than once.
Several commentators have welcomed the changes to the open banking regime, with Jessica Booth, chief operating officer at open banking specialist start-up Biza, telling The Adviser in January that incoming changes to the Consumer Data Right (CDR) should benefit brokers and customers.
She said: “Bringing non-bank lenders into the CDR completes a consumer’s financial profile.
“Most Australians have a store card, retailer-related credit card or a car finance loan. Those credit cards and car finance loans are generally offered by non-bank lenders, which has meant a consumer couldn’t use the CDR to share that data when working with their broker for a loan or using a personal financial management or budgeting tool.
“Currently, this data can only be shared by manually downloading and forwarding statements or ‘screen scraping’, which involves consumers sharing their usernames and passwords.
“Bringing non-bank lenders’ data into the CDR gives brokers and the consumers they work with the same access that they now have to share their banking data and find better deals for consumers.”
Others welcomed updates to changes to the Consumer Data Right legislation, which commenced last year and brought about 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 – including the Moneycatcha, the MFAA, and NextGen.Net – welcomed the move, saying that the changes could accelerate the use of CDR-enabled products, including home loan applications and reprice/refinance requests.
More broking groups and aggregators have been turning on open banking for brokers (available under the ‘trusted adviser’ model), with aggregation group Connective partnering with NextGen last week to make the technology solution provider’s Financial Passport feature available to the aggregator’s entire broker network within the Mercury Nexus platform (and directly to ApplyOnline®).
Financial Passport is designed to facilitate the safe transfer of client data by using the CDR framework. Brokers’ clients can complete data sharing in less than eight minutes (median time) and brokers are able to glean AI-generated insights from data.
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