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Small business and consumer data safety boosted

16 August 2023

Operational improvements to Consumer Data Right (CDR) rules have been signed into law to protect small businesses and their customers.

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CDR rules allow consumers to give an accredited business access to their consumer data so they can offer products and services tailored to their needs.

For example, in the banking sector, a customer can use it to find a mortgage that uses details in their online bank account to find a product that best suits their needs.

The changes will allow accredited providers to more easily and safely share customer data with other accredited third parties.

CDR is a safer alternative to the widespread practice known as ‘screen scraping’, in which consumers and businesses share sensitive data, such as login details. This can then be used to log in directly to third parties to extract data that isn’t available via formal platform integration points (i.e. API).

An independent review into CDR recommended that screen scraping be banned where CDR is in place and therefore formal platform integration (API) is a viable alternative.

The Federal Government says it will be consulting with stakeholders to determine options to regulate screen scraping later this year. Removing screen scraping and supporting only formal platform integration (API) ensures that customers’ sensitive login details are only known to the customer and not other providers.

In the CDR rules, accredited data recipients (‘receivers’) in the Consumer Data Right system gain consumer consent to obtain data from data holders (‘givers’). Both providers must be accredited.The new rules will come into effect on 1 December 2023.

Minister for Financial Services Stephen Jones said: “Creating a safer channel for small businesses’ data also protects their customers, and this builds on the work the Government is doing to fight scams and fraud, including the establishment of a new National Anti-Scams Centre.”

Australia’s Consumer Data Right is being rolled out in stages. Banking is first, followed by energy and then non-bank lending. This means that data holders in these industries will have to comply with Consumer Data Right compliance requirements as the system rolls out.

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