Competitiveness, not compliance, will drive CDR action

6 minute read  17.08.2021 Anthony Borgese, Kirsten Laurendet, Amanda Khoo, Daryl Wong

With the introduction of the Consumer Data Right, organisations face a golden opportunity to become an accredited data recipient. The rewards are plentiful – but there's a lot to lose if you fall behind.

The Consumer Data Right regime gives organisations the opportunity to become an accredited data recipient. They have a unique chance to gain a competitive edge – but they need to start the process now.

Since its implementation in 2019, the Consumer Data Right (CDR) regime has begun its transformation and digitisation of the Australian economy. Data holders from banks, energy and telecommunications companies will soon be required to transfer customer data if requested by their customers. In July 2021, Treasury released the Consumer Data Right Strategic Assessment Consultation Paper that explored the expansion of the CDR to whole range of sectors covering most of the economy. This will be rolled out over time. However, the opportunity to become an Accredited Data Recipient (ADR) is now available to all sectors.


The CDR will fundamentally change the business landscape in ways that many businesses do not yet appreciate. And there will be big rewards for those organisations that move first to become accredited to receive data.”
Anthony Borgese, Partner


Becoming an Accredited Data Recipient

Becoming an ADR enables businesses to receive valuable consumer and product data from all data holders. This has started with banking information, will extend to energy and telecommunications, and then potentially to health, insurance, superannuation, loyalty programs and a range of others. The premise behind the scheme is to promote competition and empower consumers with the ability to easily compare, choose and securely switch between services. If functionality of the CDR is expanded to include 'action initiation' as has been recommended, this would enable accredited bodies to not only access consumer data but also undertake actions on a consumer's behalf. This would include initiating payments, opening and closing accounts and switching between providers.

It is inevitable that entities within the above sectors will be impacted by the CDR, as they will have to comply with their obligations as data holders as the scheme rolls out. However, organisations can take proactive steps now to go beyond mere compliance and strategically benefit from the regime.

Creation of 'life admin centres'

As the CDR expands across sectors, a consequence will be a rise in 'life admin centres'. These are essentially applications from which consumers will be able to monitor and manage all of their products and services from banking and insurance to energy and healthcare from a centralised portal.

For example, banks may be able to look after not only customers' finances but also their energy needs. With action initiation available, the bank would then be able to open new energy accounts and close existing ones on customers' behalf. Similarly, insurance companies may decide to organise house and car loans, while financial institutions might offer insurance bundles with their loans.

There will be increasing competition between organisations to become the preferred life admin centre for consumers before the market is saturated.

At the heart of these developments is a drive towards consumer satisfaction. In this new landscape, customer loyalty will be more difficult to maintain as it becomes easier for consumers to switch between providers. As a result, consumer choice will be of growing importance and existing businesses will have to innovate and evolve to out-compete their opponents.

Organisations who become ADRs have the opportunity to gain a competitive upper hand. They have the chance to become their customers' 'life admin' centre, and the trusted brand where all decisions are made.

Access to customer data and insights will allow for an improved and targeted customer service experience, which organisations can curate based on specific customer needs. As the CDR expands throughout the economy, it will allow for cross sector aggregation of services to be provided by businesses, allowing them to expand the scope of their own business ecosystem.

How to become an Accredited Data Recipient

Becoming an ADR takes a significant amount of time and energy to execute – the process can take up to 12 months. Organisations need to start the process now so that they can gain a competitive advantage.

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Apply with ACCC

An organisation must apply to become an accredited body via the ACCC. This will include ensuring that they have proper processes in place to protect data, internal and external dispute resolution processes, and adequate insurance.

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Ongoing compliance

Once accredited, ADRs will need to maintain ongoing compliance with CDR rules. For example, they must ensure that all consent obtained is voluntary, express, informed, specific and easily withdrawn. After 12 months, customer consent must be reobtained or their data deleted.

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Privacy safeguards

The Office of the Australian Information Commissioner has implemented 13 privacy safeguard guidelines, which outline privacy and confidentiality requirements under the CDR regime. These go beyond the obligations imposed by the Australia Privacy Principles.

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Safe transfer of information

Organisations need to construct appropriate Application Program Interfaces (APIs) to ensure the safe transfer of information between CDR data holders. API standards are set by the Data Standards Body, which is the Commonwealth Scientific and Industrial Research Organisation's Data 61.

While the initial cost of implementation and ongoing compliance is substantial, the cost of inaction on this front is likely to be greater in the long run.

Therefore organisations should begin planning now and considering how they can leverage the CDR to benefit their unique business strategy. Alternatively, they risk having to catch up later in the game, when such innovation becomes a prerequisite to remain relevant.

An exciting new world for innovative organisations

The Consumer Data Right has already and will continue to open up an exciting new world for those brave enough to take the first steps and opt into the regime. Already, we're seeing businesses expanding their services as they comply with and engage in the CDR.

For example, Open Banking is currently being leveraged by existing banks. Commonwealth Bank has used the CDR to improve its digital banking experience, by allowing customers to view account balances from other financial institutions within their app.

The CDR has also lowered barriers to entry for fintech companies who have created their own intermediary open banking platforms, such as Frollo, Truelayer and Basiq to enter the market. If action initiation is enabled, such entities may also obtain consent to switch customers between providers so that they are able to constantly search for and secure the most competitive deals on the customer's behalf.

Investing early to gain competitive advantage

Entities and businesses will need to respond to their customers' new rights. As the CDR continues to expand, competition will inevitably increase between providers. While this may cause disruption for some, businesses who act first in innovating and disrupting the market themselves will reap the benefits.

Our CDR specialists have helped organisations go through the process of becoming an Accredited Data Recipient. Contact us to help you on your journey.