Coalition Senators Additional Comments

1.1Coalition Senators note that the Consumer Data Right (CDR) was introduced by the Coalition Government during the 46th Parliament.

1.2Coalition Senators believe that extensions to the scheme need to be carefully considered to ensure the implementation of the scheme is done properly. This will ensure this policy is successful.

1.3The scheme has cost the Commonwealth Government approximately $200million since the 2018 Budget in terms of the implementation and its roll out, and we need to ensure that this expenditure does not blow out with no obvious output.

1.4There have been concerns articulated by industry stakeholders about the scale and pace of the CDR roll out, considering the complexity of the scheme and the IT skills, legal processes and management required.

The need for a careful CDR roll-out and implementation

1.5Telstra has raised concerns about the introduction of action initiation (AI) to the telecommunications sector, arguing that it could “complicate CDR implementation and could harm the very efficient processes the telecommunications sector has developed for customers”.[1] Accordingly, Telstra recommends that AI should only be introduced when the implementation is at a mature stage.

1.6Furthermore, they have stated that any new legislation should only be considered once the “CDR is more fully understood and embedded in the economy” and that AI should be limited to the banking sector for now.[2]

1.7Zepto has emphasised “…the regulatory framework for action initiation in the CDR needs to be simple, clear and, to the extent possible, centralised” to ensure a “competitive and compliant framework”.[3]

1.8Regarding AI, the Australian Retail Credit Association (ARCA) submitted that “any material implementation failures are likely to put the widespread consumer adoption of the regime back by years”.[4] Therefore, they have recommended that:

Minimum timeframes for implementation of each type of action initiation; and

Detailed principles for establishing what is otherwise an appropriate implementation timeframe (beyond those minimum timeframes). Those principles could, for example, require adequate consultation before setting timeframes and include an expectation that the implementation timeframes only commence from the point that the relevant requirements are certain (and be adjusted if those requirements are subsequently changed).[5]

1.9During the public hearing, FinTech Australia advised that they:

“…would like clarity on the implementation road map and the potential phase-in for different action types and how they will apply to designated sectors”.[6]

1.10FinTech Australia further said “inclusive consultation” and phasing would be crucial to ensure “good levels of compliance”.[7] In their Submission, the organisation noted that:

“Trust and confidence in the CDR regime are also vitally important and persistent compliance issues among data holders and data quality must improve. …. Sectoral and functional expansion through initiatives like the rollout of Open Finance and action initiation are undoubtedly important but there is room for improvement to support and ensure the success of the CDR ecosystem which has already been built. Maintenance and compliance of the existing regime must be prioritised and balanced with the complexities of functional and sectoral expansion.”[8]

1.11Cuscal emphasised that their main concern with the bill is about the method and implementation of AI. They expressed concerns about ministerial discretion to designate certain actions under the CDR.[9]

1.12To ensure the roll-out of the CDR is efficient and done properly, Coalition Senators agree with Finder’s recommendation that there be regular legislative reviews to ensure all CDR legislation is fit-for-purpose.[10] It is crucial that these reviews take a holistic view of the CDR implementation, complexity, level of take-up and the capacity for businesses to comply.

1.13The ABA noted in their submission that:

“The CDR is yet to mature, and there are several sectors that are either being progressed for designation or still implementing their compliance obligations as data holders. Use cases are still developing, and customer usage is still low. Research has found that only 18% of consumers feel comfortable sharing data.”[11]

1.14The ABA further noted that increasing functionality may not result in an increase in customers using the CDR, and that the market should be allowed to absorb these changes. The roll-out and implementation of the scheme should be motivated by compliant market integration.

1.15Several submitters also expressed concern about the extension of the CDR into their industries. For example, the Insurance Council of Australia (ICA) said that there should be a “separate sectorial assessment” and consultation before the CDR is extended to the insurance industry.[12] In their submission, they noted that the cost of accreditation for insurance brokers, under this amendment to the CDR Act:

“…could be beyond the capacity of some of these businesses and may result [in] some brokers leaving the insurance industry reducing competition and access to risk advice, especially in regional areas”.[13]

1.16As Cuscal has noted, the rate and the size of the change in the CDR space will have an important impact on the industry, and should be carefully managed by Treasury and the Australian Competition and Consumer Commission (ACCC).[14]

1.17In their joint submission, the Chartered Accounts Australia and New Zealand (CA ANZ), CPA Australia and the Institute of Public Accountants (IPA) argued that it is important that the government educate consumers on the scheme to increase its utilisation.[15] Without this, investment in this space by government and businesses will not produce the intended return as a result of the policy in the form of increased productivity and competition.

1.18Since 2018, nearly $200 million has been expended through the federal budget towards the implementation of the CDR which must be cost effective. The benefits of the scheme to consumers and the market should be measurable and carefully monitored.

1.19Further expenditure on the CDR should be guided by this measurable benefit, and legislative reviews should take this into account.

1.20The government should consult closely and continuously with a wide range of industry stakeholders to ensure the roll-out and implementation of the CDR occurs carefully and orderly, ensuring the best possible benefit to consumers and businesses.

1.21The government undertakes regular legislative reviews of the CDR legislation, guided by measurable market outputs from the scheme along with consumer uptake.

Senator Andrew Bragg Senator Dean Smith

Deputy ChairMember

Senator for New South Wales Senator for Western Australia

Footnotes

[1] Telstra, Submission 1, p. 2.

[2] Telstra, Submission 1, p. 2.

[3] Zepto, Submission 3, p. 3.

[4] Australian Retail Credit Association (ARCA), Submission 4, p. 2.

[5] ARCA, Submission 4, pp. 2-3.

[6] Mr Nick Kavass, Policy Lead, FinTech Australia, Committee Hansard, 18 April 2023, p. 2.

[7] Mr Nick Kavass, Policy Lead, FinTech Australia, Committee Hansard, 18 April 2023, p. 6.

[8] FinTech Australia, Submission 6, p. 2.

[9] Mr Damir Cuca, Chief Executive Officer and Founder, Basiq Pty Ltd, a subsidiary of Cuscal Ltd, Committee Hansard, 18 April 2023, p. 9.

[10] Finder, Submission 7, p. 5.

[11] Australian Banking Association (ABA), Submission 12, p. 6.

[12] Insurance Council of Australia (ICA), Submission 9, p. 1.

[13] ICA, Submission 9, p. 3.

[14] Cuscal Limited, Submission 13, p. 2.

[15] Charted Accountants Australia and New Zealand (CA ANZ), CPA Australia (CPA Australia) and Institute of Public Accountants (IPA), Submission 17, p.2.