MEDIA RELEASE The release of a senate inquiry report suggesting extending the Consumer Data Right (CDR) to superannuation and pensions information, will lead to increased competition and improved transparency, but there are also reputational and competition risks to consider, according to QMV Legal partner, Jonathan Steffanoni.
The CDR is a competition policy which seeks to ensure that individuals have the right to access and review data held by institutions which relates to them. Open Banking, the first application of the CDR, has created an opportunity for the super industry to register as data recipients, and with member consent, use member banking information to build a better profile of the member’s overall financial situation and improve levels of personalisation.
Mr Steffanoni believes by incorporating super and pensions into the CDR – as recommended by the Productivity Commission – it will lead to the development of innovative self-service financial planning tools which will benefit consumers and reduce the costs associated with comprehensive financial planning.
However, he said there are a number of challenges to be faced in implementing the proposed changes.
“The CDR inherently introduces the strategic risk of asymmetric competition, with the possibility of third-party applications being developed to occupy the space between members and super trustees. This would see superannuation trustees losing some control over the way in which they interact with members.
“Another prominent risk is reputational, with a growing public awareness and sensitivity about the ethics and economics surrounding the use of personal data. Super trustees will need to be aware of the risks of perceived inappropriate use of member data when personalising engagements and services,” he said.
Mr Steffanoni said ensuring the accuracy, quality, timeliness, and completeness of data under the terms of the CDR regime also warrants considerable assessment if it’s to be effectively implemented.
“There are civil penalties associated with data holders failing to ensure adequate data accuracy, with super trustees needing to ensure that robust data quality monitoring frameworks are in place and adhered to.
“The use of existing standards and infrastructure, including the ATO’s Member Account Attribute Service and Member Account Transaction Service reporting mechanisms – might mitigate some of the implementation challenges,” he said.
Mr Steffanoni also believes that along with adequate sector-wide consultation, a gradual approach to transition is necessary to ensure adequate planning and oversight by regulatory bodies including the Australian Competition and Consumer Commission.
“The CDR will ultimately provide consumers with greater control and confidence over the uses of data which they choose to share.
The introduction of new rules will bring much needed confidence to consumers, he said.
“While data sharing is not new, the Consumer Data Right will result in consumers having greater control and confidence over their personal data, how it is used, and what they choose to share.”