Publication
Ireland
On 31 October 2023, the Screening of Third Country Transactions Act 2023 (the “Act”), which establishes a new foreign direct investment ("FDI") screening regime in Ireland, was enacted.
Australia | Publication | April 2023
A couple of recent developments have brought the consumer data right (CDR) back into the spotlight.
First, on 5 April 2023 the ACCC released a report entitled “Data Quality in the Consumer Data Right”.1 In that report, the ACCC noted concerns about consumer data quality (including that inadequate data quality is hindering reliable product comparisons). The report also stated that the ACCC and the Office of the Australian Information Commissioner are treating data quality as a priority area for compliance and enforcement activities.
Second, in March 2023 the Productivity Commission released its 5-Year Productivity Inquiry report “Advancing Prosperity”. Volume 4 of the report addresses Australia’s digital technology and data usage, with the Commission examining opportunities to improve productivity by increasing digitisation and data use in the Australian economy.2 The Commission found that the CDR provides a strong foundation for consumer data sharing, but relatively low uptake means that economic benefits are yet to be fully realised. The report suggests that initiatives such as ‘action initiation’, including payment initiation and account switching, could increase uptake in the future.
In this article, we explore the productivity benefits (and challenges) of action initiation, as well as the proposed expansion of the CDR into telecommunications and open finance. Given the ACCC’s clear message around enforcement, and the projected increased uptake of the CDR regime, it will be important for businesses to keep on top of existing obligations and plan ahead in respect of impending changes.
a. The CDR framework was created to provide individuals and businesses with a right to access and share their data in certain industry sectors.
b. The CDR was enacted by the Treasury Laws Amendment (Consumer Data Right) Act 20193, which inserted a new Part IVD into the Competition and Consumer Act 20104. The CDR Rules5 provide the framework for how the CDR operates.
c. A sector needs to be designated by the Minister to be subject to the CDR. So far, the banking sector (i.e. ‘open banking’)6, the energy sector7, non-bank lending (which is part of a broader category known as ‘open finance’)8, and the telecommunications sector9 have been designated. The CDR is currently only active in the banking and energy sectors - the rules for telecommunications and non-bank lending are not yet finalised.
d. In Australia, consumers can currently only consent to giving accredited entities their data in read-only form. This can be contrasted with the UK where for many years consumers have been able to consent to giving accredited entities both read and write access to their data. Write access provides consumers the power to instruct accredited entities to initiate actions on their behalf (rather than just read or view data). This can include making a payment, switching products, or opening or closing an account.
a. On 26 September 2022 the Treasury released draft legislation for consultation, to enable action initiation as part of the CDR.10 Action initiation would provide CDR consumers with the ability to use the CDR to have an action initiated on their behalf.
b. 36 submissions were received as part of the consultation. The submissions were broadly supportive, but raised a number of challenges and risks (which largely centred on security, privacy, ensuring flexibility, and reducing compliance costs).
c. On 30 November 2022 a Bill was introduced to Parliament to give effect to the proposed reforms, the Treasury Laws Amendment (Consumer Data Right) Bill 2022 (Bill).11 Below we summarise the key parts of the Bill.
d. The significance of action initiation cannot be overstated. In the UK, action initiation (otherwise known as ‘write access’) has enabled innovative business models to develop. This has included a write access enabled AI assistant that can transfer funds between accounts, a system that automates the payment of bills on their due dates from designated accounts, a website that compares term deposit rates and automatically invests in the best ones, or a system that automatically allows consumers to round up purchases into an investment account.12 The introduction of action initiation in Australia has the potential to increase use and adoption of the CDR framework, and create new opportunities for businesses. For a bank, for example, this could include changing data (including personal information) about an account holder, instructing a bank to make a payment through a third party application, applying for new products and services through a third party comparison service, and closing an account.13 For consumers, this may lead to lower prices (due to automation, efficiencies, and increased competition) and less friction in user experiences.
e. With that opportunity will come challenges and risks. We set out some of the potential impacts below.
f. The Bill is currently before the Senate Economics Legislation Committee which is expected to report in May 2023.15
a. As noted above, telecommunications was designated as a CDR sector in January 2022.16 It is expected that the rollout of the CDR to the telecommunications sector will allow consumers to access consolidated information about their internet and mobile bills, facilitate greater product choice and bundling of solutions that best suit consumers’ needs, and increase competition in the sector.
b. Following the designation, Treasury released an exposure draft of the amendments to the CDR rules required to expand the CDR to telecommunications (as well as other operational enhancements to the CDR rules).17 The rules need to be finalised before the CDR can apply to the telecommunications sector.
c. The proposed changes to the CDR rules for the telecommunications sector include:18
d. Other proposed operational enhancements to the CDR rules include the following:20
e. Some submissions from telecommunications-sector participants raised concerns about how long it would take to implement these rules.21 Along with the interaction with action initiation, this may explain at least in part why the rules have not yet been finalised.
a. After telecommunications, the next step will be to expand the CDR to ‘open finance’.22 Open finance (a similar concept to open banking) will allow consumers to compare and save across a greater range of financial products in addition to banking, including general insurance, superannuation, merchant acquiring and non-bank lending service providers.
b. Treasury’s Strategic Assessment Report of 2022 noted that open finance will be implemented in phases involving the assessment and designation of key datasets relating to superannuation, general insurance and merchant acquiring, and non-bank lending service providers in 2022.23
c. During March – April 2022, Treasury conducted a sectoral assessment on applying the CDR to the non-bank lending sector.24 The submissions were broadly supportive, given it will build on data already available in banking, energy and telecommunications (and provide a more comprehensive assessment of a consumer’s credit profile and risk), and encourage innovation and competition. However, some of the submissions also identified concerns, relating to the differences between the non-bank lending sector, and other sectors and the degree of variation within the non-bank lending sector. This included:
d. On 19 August 2022 the Government announced the release of Treasury’s final sectoral assessment report recommending the non bank lending sector be designated for the CDR.26 Non-bank lending was then designated as a CDR sector in November 2022.27 Following the designation, Treasury sought input on the development of CDR rules and data standards to implement the CDR in the non-bank lending sector.28 The rules have not yet been finalised.
The developments discussed in this article (the proposal to implement action initiation, and the application of the CDR to telecommunications and open finance) are significant and will increase engagement and participation in the CDR this year and beyond. Action initiation, in particular, has the potential to be a game-changer in terms of business opportunities, transaction efficiency and productivity, but will also present new risks and challenges that business will need to navigate without a lot of precedent.
We will keep you advised of the progress of the Treasury Laws Amendment (Consumer Data Right) Bill 2022 and the CDR rules for telecommunications and open finance.
See, for example, Deloitte Submission to the Inquiry into Future Directions for the Consumer Data Right at page 25.
See, for example, ANZ Submission to the Inquiry into Future Directions for the Consumer Data Right: Issues Paper at page 5.
See Office of the Australian Information Commissioner - Submission in response to: Consumer Data Right - Exposure draft legislation to enable action initiation at pages 9, 11, 12.
For further information see the following 3 links: Exposure Draft - Competition and Consumer (Consumer Data Right) Rules 2020 with proposed amendments; Exposure Draft Explanatory Materials - Competition and Consumer Act 2010; Competition and Consumer (Consumer Data Right) Amendment Rules (No. 1) 2022
Carriage service providers
See, for example, Communications Alliance Submission on proposed amendments to the CDR
See the media release More power to compare and switch telco providers and share finance data
Authorised deposit-taking institutions
Publication
On 31 October 2023, the Screening of Third Country Transactions Act 2023 (the “Act”), which establishes a new foreign direct investment ("FDI") screening regime in Ireland, was enacted.
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