15 August 2018

Open Banking & Consumer Data Right – new draft law released

This article was written by Scott Farrell.

The release of the exposure draft of the Consumer Data Right law is the next important step in starting Open Banking in Australia, after the Government’s adoption of the recommendations of the Open Banking Review. The new law will create the Consumer Data Right framework, so that it can be implemented in banking (as Open Banking) and in the energy, telecommunications and other sectors. The consultation on this landmark new law presents a vital opportunity to participate in this fundamental development in the Australian data economy. 

What has been released?

The Government has released a range of materials on the Treasury Laws Amendment (Consumer Data Right) Bill 2018, including the exposure draft of the new legislation, explanatory materials, a ready reckoner which shows where particular issues are addressed in the draft legislation, a summary of privacy protections and a quick guide to making submissions. These can all be found here.

What is Open Banking and the Consumer Data Right?

Open Banking gives a customer a right to direct that the information which they already share with their bank be safely shared with others they trust.  It is designed to give customers more control over their information, leading to more choice in their banking and more convenience in managing their money, and resulting in more confidence in the use and value of an asset mostly undiscovered by customers – their data. 

Open Banking is to be the first part of the Consumer Data Right in Australia, and the framework is to be extended to other sectors, including energy and telecommunications.

More about Open Banking and the Consumer Data Right can be found here.

What has happened already?

The Australian Government commissioned a review into implementing Open Banking in Australia in July 2017 (which was led by the author of this Alert).  Its report was released by the Government in February 2018.  In May, the 50 recommendations in the report were adopted by the Australian Government as the framework for Open Banking in Australia, as well as the broader multi-sector Consumer Data Right (more information on this can be found here).  The new draft law represents the next step in bringing Open Banking and the Consumer Data Right into life for Australian customers. 

How does the new law fit in?

The Open Banking Review set out a multi-layered regulatory framework to apply to Open Banking and the Consumer Data Right:

  • Legislation which is to set out the overarching objectives of the Consumer Data Right, is to contain the power to turn on the Consumer Data Right within a sector, and is to create the framework for rules and standards
  • A Designation by the Minister that the Consumer Data Right applies to a sector (such as the banking sector, for Open Banking)
  • Rules which describe the principles, requirements and outcomes for the application of the Consumer Data Right to that sector (such as the rules for Open Banking which are to be provided by the Australian Competition and Consumer Commission, in consultation with the Office of the Australian Information Commissioner)
  • Standards which set out the technical method of implementation of data transfer and related elements for the way that the Consumer Data Right is to work in that sector (such as the Open Banking standards, currently being considered by the Data Standards Body).

The exposure draft of the law just released is the first part of this hierarchy. It is to be made as new parts of the Australian Competition and Consumer Act, as recommended by the Open Banking Review. 

The other parts of the regulatory framework which apply the Consumer Data Right to the banking sector (Open Banking) are expected to be released in the future. 

Why should I care?

The Consumer Data Right is set to fundamentally re-balance the relationship between customers and businesses with respect to customer information. The greater control given to customers has the aim of providing choice, convenience and confidence for customers. Also, the Consumer Data Right should encourage an increase in competition in the sectors to which the right applies and create opportunities for business by setting a safe and secure framework on which a vibrant and creative Australian data industry can grow. Many Australian businesses should become involved.

What should I do?

If you haven't already, the time to engage is now. The consultation on this exposure draft of the law, and the rules and standards which will follow, is the opportunity to understand and contribute to the framework for Australia’s customer-focussed data economy. The quick guide to making submissions provided by the Government makes it clear that the exposure draft is, in effect, a working document and feedback is encouraged.

The Government has announced that there will be roundtables to discuss the exposure draft of the legislation and that submissions can be made on it up until 7 September 2018.

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