The government has opened consultation on a draft designation instrument that would extend the consumer data right to non-bank lenders.
This follows advice that this will lower barriers for borrowers switching lenders, leading to greater competitive tension by streamlining application processes, helping non-bank lenders make more accurate and efficient lending decisions.
The government believes better-informed consumers and more transparent markets will drive innovation and competition.
The CDR gives consumers the right to use data that businesses hold about them and also allows consumers to consent for data to be shared with other service providers.
This allows consumers to make more informed choices about market offerings and lowers processing costs for service providers.
Combining CDR in the non-bank lending sector with other open banking initiatives will give consumers a better understanding of their financial position, further empowering their choices.
CDR for energy will commence in November this year.
The government is committed to continuing the implementation of the CDR in telecommunications and rolling out the CDR to other sectors in the future.
The non-bank lending draft designation instrument can be found on the Treasury website, and Treasury welcomes written submissions by 15 September.
The earliest the government can designate a sector is 60 days after publication of Treasury’s report.
“With the independent Reserve Bank raising interest rates to respond to inflation, there has never been a better time to apply the Consumer Data Right to our loans sector,” said Stephen Jones, Assistant Treasurer.
“Borrowers will be able to use their own data to properly compare loan offerings and decide on the best one for them.
“This will keep lenders on the ball as well as lowering processing costs if a customer decides to change providers.”
