The government will extend the functionality of the Consumer Data Right by introducing consumer-directed third-party action initiation, which will enable payment initiation in open banking.
The addition of action initiation to the CDR was the key recommendation of the Inquiry into Future Directions for the Consumer Data Right, which was headed by lawyer Scott Farrell and reported in October.
It has also been at the top of the wish list of industry participants in CDR.
Yesterday, the government released its response to the inquiry, saying other key recommendations it supports include enhancing CDR data sharing and adopting international data standards to support data portability across jurisdictions.
The government said action initiation (including payment initiation) “will enable new, competitive and consumer-focused payment services to develop”.
Action initiation through the CDR allows a consumer to consent to an accredited data recipient initiating actions beyond requests for data sharing. This could involve third parties switching products or making payments on a consumer’s behalf.
Consents can be for actions to be taken on an ongoing basis or within time limits. Consents can be withdrawn at any time.
The government agreed with the inquiry recommendation that bank account-to-account payment initiation through the CDR should be prioritised so its design can be co-ordinated with other developments in the payments industry.
Payment initiation will apply to all ADIs subject to the CDR data sharing obligation.
The government also agreed with the inquiry recommendation that action initiation only be introduced sector by sector after a “sectoral assessment”, which would look at sector-specific regulatory issues and the “digital maturity” of the sector.
Action initiation in the CDR will only enable an accredited person to initiate actions that the consumer is already able to perform with a data holder. It will not be used to require data holders to perform actions they would not otherwise offer.
“The CDR will not seek to create a competing action layer,” the government said.
Not all accredited persons will be allowed to offer action initiation. In October, the government amended the CDR rules, introducing a tiered accreditation system that includes sponsored accreditation, a CDR representative model, access by trusted professional advisers and an access model called “CDR insight”.
The aim was to encourage greater participation in the scheme.
The government said some actions would require higher levels of accreditation and it would undertake information security assessments to determine how far action initiation will be extended through the tiers.