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The joint accounting bodies have welcomed the inclusion of non-bank lenders in the Consumer Data Right expansion with lingering concerns about the cost of accreditation.
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Joint bodies challenge ‘contradictory’ CDR expansion
09 January 2025
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In a joint submission to Treasury, CA ANZ, CPA Australia and the Institute of Public Accountants expressed concerns about large non-bank lenders having a competitive advantage in comparison to consumers in the consumer data right expansion.
The joint bodies did approve of the inclusion of non-bank lenders (NBLs) in the Consumer Data Right (CDR) expansion and said it would enable consumers to utilise their data across the breadth of Australia’s banking system.
It was also revealed the proposed inclusion would only mandate participation by very large and large non-bank lenders which induced cost of accreditation and concerns.
In the submission, the joint bodies said the NBL inclusion would not provide the outcome that was originally anticipated by Treasury.
“While we support expanding the CDR to include NBLs, we consider the proposed classes of NBLs to be mandated will not facilitate more informed consumer engagement, help consumers to better understand and manage their finances nor drive competition in the lending sector as intended,” the submission said.
The bodies recommended for Treasury to work with industry to seek innovative data holders into which smaller players could plug into, to mitigate prohibitive costs of accreditation and compliance in the CDR.
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This was recommended as the bodies believed the rationale for the proposed classes of NBLs designated for mandatory data sharing needed clarification.
The current proposed classes of over $10 billion in resident loans and resident finance leases for initial NBLs and more than $1 billion for large NBLs were considered to be too high of a threshold.
The joint bodies also said they would seek clarification as this threshold contradicted past threshold concerns.
Previously, the Australian Competition and Consumer Commission recommended applying the Collection of Data Act definition of a data holder to assets greater than $50 million.
The ACCC originally made this recommendation in 2022 to capture providers that closely competed with the banking sector and the inclusion of medium and large NBL providers.
It was also noted that in 2022, in Treasury’s consultation paper, the Collection of Data Act definition was of concern due to it including 1,500 NBLs, many being small entities.
“To avoid the potential cost of compliance on smaller NBLs, in that paper, Treasury said it was considering mandating data sharing obligations for NBLs that have total resident loan and resident finance lease balances over $400 million,” the submission said.
“There does not appear to be any rationale for the proposed thresholds to define an initial and large provider being significantly higher.”
The bodies also expressed disagreement toward the narrowing scope of CDR data from seven years to two years.
It was outlined this would not provide any benefit to consumers, specifically if they wanted to change accountants, as they would be unable to access their long-term historical data.
It would also negatively impact consumers in terms of compliance, as records reviewed by the Tax Office must cover five years and a reporting entity must retain records for seven years to be compliant with the anti-money laundering and counter-terrorism financing regime.
“We are unclear how this is in the best interests of consumers or the parties they wish to disclose data to, particularly, their trusted advisers.”
“The rationale provided in the Exposure Draft Explanatory Materials appears to only consider the impact on data holders with no consideration of the use of historical data by the consumers and professionals that service consumers.”
The bodies concluded the proposed design for the inclusion of NBLs and narrowing the scope of CDR data was based on enabling data holders and accredited parties to service only priority use cases.
“This appears in contrary to, and will not achieve, Treasury’s stated aims of increasing the availability of data or helping consumers, not just consumers that fall into priority cases, to better understand and manage their finances.”
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