In 2022, the Australian Government put forward a proposal to make significant strides in the evolution of the Consumer Data Right (CDR) with the introduction of legislation enabling action initiation. This transformative proposal aims to expand the scope of the CDR beyond mere data sharing, empowering consumers to take direct action based on the insights they derive from their data.

The complete Draft Bill can be found here,

Summary of Proposed Changes

The proposed legislation builds on the existing framework of the CDR, as established in the Competition and Consumer Act 2010. It introduces a new functionality that allows consumers to instruct businesses to perform actions on their behalf. This evolution marks a pivotal shift from data sharing to action initiation, thereby amplifying consumer control and engagement in the digital economy.

Key Features of the Proposed Legislation

The draft bill outlines several key components that establish a robust framework for action initiation within the CDR:

• Accredited Action Initiators and Action Service Providers: The legislation introduces two new entities—Accredited Action Initiators (AAIs) and Action Service Providers (ASPs). AAIs will be empowered to send action initiation requests to ASPs on behalf of consumers. ASPs, which are existing data holders, will execute these requests as if they originated directly from consumers.
• Instruction and Action Layers: Action initiation consists of two main components—the instruction layer and the action layer. The instruction layer will operate within the CDR framework, allowing AAIs to send requests to ASPs. The ASPs will then authenticate consumers and carry out the requested actions within the action layer, which remains outside the CDR's regulatory scope.
• Consent and Privacy Safeguards: Ensuring consumer consent and privacy is central to the proposed changes. Accredited Action Initiators can only initiate actions with explicit consumer consent. The legislation extends the existing CDR privacy safeguards to encompass action initiation, ensuring that consumer data is handled securely and transparently.
• Ministerial Declaration and Rule-Making: The proposed framework grants the Minister the authority to declare new action types, similar to the current process for data-sharing designations. Rules governing these actions will be developed to establish obligations, criteria for accreditation, and privacy safeguards.

The Potential Impact of Action Initiation

The introduction of action initiation into the CDR is expected to unlock numerous benefits for consumers and businesses alike:

• Enhanced Consumer Control: Consumers will have the ability to instruct businesses to perform various actions, such as making payments, switching service providers, or updating personal information across platforms, all with their consent.
• Innovation and Competition: By enabling new business models, action initiation is anticipated to drive digital innovation and boost competition in the Australian market. Businesses will be able to offer enhanced services that simplify complex processes for consumers.
• Reduced Complexity and Cost: The streamlined processes resulting from action initiation will reduce the complexity, time, and cost associated with managing personal data and making financial decisions.

The potential of action initiation is evident in the success of similar initiatives, such as payment initiation within the UK’s open banking scheme, which boasts over six million regular active users. Australia’s move towards action initiation signifies a commitment to leveraging digital innovation for consumer empowerment and economic growth.

Conclusion

As Australia prepares to embrace the next phase of the CDR with action initiation, the proposed legislation sets the stage for a more dynamic and consumer-centric digital economy. By expanding the CDR's functionality, this initiative promises to enhance consumer empowerment, drive innovation, and foster a more competitive market landscape. The Government invites feedback from stakeholders to refine and finalize the legislation, ensuring it meets the needs of consumers and businesses alike.