The Consumer Data Right (CDR) Rules govern how open banking operates in Australia.
The V5 Rules were announced by Minister Stephen Jones in July 2023 and the changes will come into effect no later than this December.
The big change is the introduction of a new "Business Consumer Disclosure" consent which gives business consumers more options to participate in CDR data sharing and introduces greater flexibility into the CDR regime.
Here's what it means for businesses.
Allowing business consumers to share their data with more advisers and service providers
The Business Consumer Disclosure consent allows businesses to share their CDR data - via an Accredited Data Recipient (ADR) like Envestnet®| Yodlee® - with third parties who are not on the Trusted Adviser list.
The Trusted Adviser pathway was announced back in 2021 in the V3 Rules update and included a specific list of persons such as accountants, lawyers, financial advisers, tax advisers and mortgage brokers.
Stakeholder feedback indicated that this list of professions did not adequately cover the range of advisers and other services commonly used by businesses.
This new amendment means that additional service providers - such as bookkeepers, finance brokers, insurance brokers and business coaches - can receive CDR with the consent of the business.
Easier access to CDR data for payroll, invoicing, payments and accounting apps
The V5 Rules also permit CDR data sharing with software applications that offer services to small businesses.
This will allow for much greater flexibility in CDR data usage by a range of apps that businesses use for day-to-day financial administration, such as payroll, invoicing, payments and accounting.
As a lot of adoption of CDR is driven by practical and valuable use cases, and most small businesses use cash flow accounting rather than accruals, this amendment enables the very exciting ability to use open banking data to prepare BAS and income tax returns.
Encouraging adoption of open banking by the business consumer
Australia’s CDR regime has always had businesses in scope and it’s exciting to see these amendments clearly refer to the “business consumer.”
A business consumer can be a non-individual - such as a company - or an individual who has an active ABN. However, there is a pre-requisite in the rules that CDR data sharing must only be for the services that the individual uses in a business capacity.
Another big benefit of these rule changes is that businesses will be able to use CDR to share bank statements with finance brokers who can help access funding like asset finance and business loans.
With non-bank lenders starting to come into CDR as data holders from November 2024, this is synergistic, as the Trusted Adviser list only mentions “mortgage” brokers.
Supporting Australian businesses
At Envestnet® | Yodlee®, we are excited by all opportunities for expansion of Australia’s CDR in banking and into open finance more generally.
We’re excited by the potential for CDR to support the rapidly developing, data-driven economy here in Australia and the role fintech organisations like Envestnet | Yodlee can play to support Australian businesses to save time, money and hassle on their financial administration.
With so much opportunity in CDR, it can be hard to know where and how to start, so if you’d like more information, please reach out to our team.
