On 19 August, the Government announced* the release of Treasury’s Consumer Data Right (CDR): Non-bank lending sectoral assessment final report and also the non-bank lending draft designation legislation for consultation. The exposure draft designation instrument for consultation sets out how it will include non-banking lending under the CDR. Specifically, CDR is now intended to capture information about Buy Now Pay Later products and white label products sold by third parties. The consultation closes on 16 September.
- The exposure draft designation instrument for consultation sets out how it will include non-banking lending under the CDR. Specifically, CDR is now intended to capture information about Buy Now Pay Later (BNPL) products (BNPL providers but not the merchants that offer BNPL) and white label products sold by third parties. The draft designation instrument proposes that a threshold of A$50 million of annual financing be included in the CDR rules to cover the non-bank lenders intended to be captured by the CDR.
- The draft designation instrument envisages that the same kind of data that ADIs make available will be designated in relation to non-bank lenders. This includes payments, charges, rates, repayment schedules, eligibility criteria, contract terms and conditions, and customer contact details (subject of course to privacy limitations).
- An important question still unanswered is how non-banks are to be defined for the purposes of the CDR. In open banking, ADIs are identified as data holders but there is no equivalent for non-bank lenders that neatly captures the relevant entities. Broadly, the Financial Sector (Collection of Data) Act (FSCODA) reporting regime rather than the ASIC Act licensing regime is more likely to be used to capture non-bank lenders. Treasury has advised that they are still confirming, during this consultation period, that the definitions work for those entities that engage in securitisation arrangements.
- The final report has concluded that a data holder under the CDR should be an originator of the financial product not another entity established to support a securitisation model such as a trustee of a special purpose funding entity. We understand from Treasury that this will be clarified at the rules stage (to be made once the sector is designated).
In line with new Government’s focus on consumer rights, there is a clear priority for consumers to gain financial benefits from the CDR over the practicalities for lenders to collect and distribute data upon request.
Treasury will accept comments and feedback on the exposure draft designation legislation up until 16 September. If you wish the ASF to present any issues to Treasury, please contact the ASF.
(*Quotes attributable to Stephen Jones, Assistant Treasurer
“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.
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.”)