Why the Consumer Data Right matters and you need to tell Australian politicians what you think

Next week, the Australian Parliament will cast a pivotal vote on advancing the Consumer Data Right (CDR) to Action Initiation.

This decision could redefine consumer freedom and competition across the nation, making it one of the most significant moments in our history.

What is Action Initiation? 

Action Initiation will enable consumers to take unprecedented control over their financial interactions, such as opening and closing accounts, switching financial products, and processing payments—all with just a few clicks.

This capability will dismantle the barriers imposed by legacy banks and service providers, allowing technology intermediaries to streamline these processes and offer consumers savings and flexibility.

Imagining the future

Imagine a world where payment transactions incurs no transaction fees or where consumers are automatically switched to the highest interest savings accounts with a couple clicks.

The implications are profound, offering both convenience and substantial financial benefits.

• Zero Transaction Fees: Instead of inputting your credit card number and being charged a transaction fee, you could click a button to deposit funds directly from your account, eliminating fees altogether.
• Instant Product Switching: Compare financial products online and switch to a better deal instantly.
• Automatic Savings Maximisation: Automatically switch savings accounts when higher interest-bearing accounts become available.
• Immediate Loan Adjustments: Receive a prompt when your home loan interest rate is too high and switch lenders instantly.

Why Action Initiation matters

Action Initiation frightens incumbents—banks, energy providers, and others—because it allows consumers to “vote with their feet” instantly. These incumbents have been vocal against CDR and Action Initiation, deploying well-crafted lobbying campaigns through industry associations that serve their interests over consumers’.

Let’s take a moment to understand why CDR was created. CDR exists to give consumers control over their data, allowing them to share it with third parties, thereby increasing competition, transparency, and enabling seamless switching between providers. It is hard to find examples where increased competition has been detrimental to consumers.

Who is opposing CDR?

The powerful incumbents, who wield significant influence over the government, are actively trying to slow down or halt CDR and Action Initiation. Why? Because it directly challenges their stronghold over Australians, breaks the chains of overpriced products, and threatens their oligopoly.

For too long, a lack of transparency and high switching barriers have kept consumers shackled to products that lead to overcharging and loyalty taxes.

The ACCC home loan price enquiry demonstrated that the longer you stay with the same provider, the higher your interest rate.

]Data from Sherlok, analysing hundreds of thousands of home loans, confirms this finding: many consumers are unknowingly paying too much and it’s too hard to switch.

Proven benefits from CDR

So does CDR really work? Sherlok’s use of CDR to track interest rates and automatically lower them provides a real-world benefit for consumers. Over six months, Sherlok saved brokers’ clients (homeowners) $77 million in home loan interest.

Here are some individual successes:

Individual home owners who have been hit with 13 interest rate rises. CDR has enabled Sherlok to help Australians offset the rising rates and rising cost of living by; 

• Saving $35,402 in annual interest for a homeowner by repricing them to a lower rate with the existing lender. 

• Achieving a 2.80% (280bps) interest rate reduction for a single homeowner  by identifying the rate was too high from CDR data and repricing them to a lower rate with the same lender.

• Reduce rates by 0.48% on average for the 6mths from July 2023 to Dec 2023. Reducing a home loan interest rate by 0.48% makes a significant and tangible difference to Australians. 

Imagine consenting to CDR—a simple process taking just two minutes—and seeing your home loan interest rate drop by 2.80% or saving $35,402 annually in interest. Consider the profound impact if every Australian could achieve this. It’s clear why incumbents are apprehensive about CDR and Action Initiation.

CDR enables transparency, empowers consumers to take control of their data to unlock innovation that speeds up and streamlines switching. 

Without CDR and action initiation advancing, and the continued rollout of CDR, Australia risks succumbing to the oligopoly and forever being stuck in a time warp of reduced competition and less freedom. 

The integrity of competition and the Australian way is being challenged by powerful companies, and your voice is crucial in defending it. The very essence of competition and the Australian way is under threat from powerful companies. Your voice is essential in this fight for consumer rights.

If you believe Australians deserve the freedom to easily switch products and access better deals, please contact your local MPs and Senators. Urge them to vote YES on CDR Action Initiation to enhance competition and empower consumers.

I’ve personally taken the time to send an open letter in support of CDR Action Initiation to Assistant Treasurer and Financial Services Minister Stephen Jones to the following Senators.  

senator.allman-payne@aph.gov.au; senator.antic@aph.gov.au; senator.askew@aph.gov.au; senator.ayres@aph.gov.au; senator.babet@aph.gov.au; senator.bilyk@aph.gov.au; senator.birmingham@aph.gov.au; senator.bragg@aph.gov.au; senator.brockman@aph.gov.au; senator.carol.brown@aph.gov.au; senator.cadell@aph.gov.au; senator.canavan@aph.gov.au; senator.michaelia.cash@aph.gov.au; senator.chandler@aph.gov.au; senator.chisholm@aph.gov.au; senator.ciccone@aph.gov.au; senator.colbeck@aph.gov.au; senator.cox@aph.gov.au; senator.darmanin@aph.gov.au; senator.davey@aph.gov.au; senator.duniam@aph.gov.au; senator.farrell@aph.gov.au; senator.faruqi@aph.gov.au; senator.fawcett@aph.gov.au; senator.katy.gallagher@aph.gov.au; senator.ghosh@aph.gov.au; senator.green@aph.gov.au; senator.grogan@aph.gov.au; senator.hanson@aph.gov.au; senator.hanson-young@aph.gov.au; senator.henderson@aph.gov.au; senator.hodgins-may@aph.gov.au; senator.hughes@aph.gov.au; senator.hume@aph.gov.au; senator.kovacic@aph.gov.au; senator.lambie@aph.gov.au; senator.liddle@aph.gov.au; senator.lines@aph.gov.au; senator.mcallister@aph.gov.au; senator.mccarthy@aph.gov.au; senator.mcdonald@aph.gov.au; senator.mcgrath@aph.gov.au; senator.mckenzie@aph.gov.au; senator.mckim@aph.gov.au; senator.mclachlan@aph.gov.au; senator.nampijinpaprice@aph.gov.au; senator.oneill@aph.gov.au; senator.matt.o’sullivan@aph.gov.au; senator.paterson@aph.gov.au; senator.payman@aph.gov.au; senator.barbara.pocock@aph.gov.au; senator.david.pocock@aph.gov.au; senator.polley@aph.gov.au; senator.pratt@aph.gov.au; senator.rennick@aph.gov.au; senator.reynolds@aph.gov.au; senator.roberts@aph.gov.au; senator.ruston@aph.gov.au; senator.scarr@aph.gov.au; senator.sharma@aph.gov.au; senator.sheldon@aph.gov.au; senator.shoebridge@aph.gov.au; senator.smith@aph.gov.au; senator.marielle.smith@aph.gov.au; senator.steele-john@aph.gov.au; senator.sterle@aph.gov.au; senator.stewart@aph.gov.au; senator.thorpe@aph.gov.au; senator.tyrrell@aph.gov.au; senator.urquhart@aph.gov.au; senator.van@aph.gov.au; senator.walsh@aph.gov.au; senator.waters@aph.gov.au; senator.watt@aph.gov.au; senator.whish-wilson@aph.gov.au; senator.wong@aph.gov.au 

• Adam Grocke is the founder and CEO of fintech startup Sherlok.