Consumer Data Right Proposal – Industry Reaction


The government has taken the first steps to establish a Consumer Data Right (CDR), a legal framework for companies to share their client’s personal information with competitors.

The system, proposed by MP David Clark, would see the introduction of a streamlined system so consumers can switch their business to a competing provider, such as power, phone, and insurance companies, more easily.

However, based on submissions to MBIE, the idea does not have the unqualified support of insurance firms.

Partners Life says in its submission that a potential problem in developing a CDR system is the collection of legacy information.

“Older businesses may hold consumer information in a non-digital or machine-readable format,” says the firm. “There would be significant costs involved in introducing a regime that would require access to such legacy information.

“We assume that the legislation would not have retrospective effect, but note that this would reduce the immediate usefulness to existing consumers. The costs would be significant, but difficult to quantify until the scope of the regime is clearly articulated.“

Fidelity Life highlighted the difficulty of MBIE comparing the life insurance industry with banking and utility sectors “…as life insurance products are often not easily comparable”.

It is our view life insurance should be excluded…

“It is our view life insurance should be excluded,” says the firm. “This aligns with Australia, who chose to exclude insurance from the scope of its Australian CDR.”

The Australian consumer data right was introduced in 2019.

“While the proposed regime requires consumer consent, many consumers will have little comprehension of the scope of personal information held by businesses and what they are agreeing to,” says Fidelity Life.

“There are also concerns that businesses which see data portability as advantageous may treat potential customers who don’t consent to their information being transferred less favourably.

“In the life insurance sector, we don’t necessarily agree that consumer welfare will be improved. Life insurance is unique, and a CDR won’t necessarily give consumers the power to make informed buying decisions.”

In the life insurance sector, we don’t necessarily agree that consumer welfare will be improved…

Fidelity Life says that while a CDR might enable consumers to seamlessly switch product providers more easily, this might not always be in the consumer’s best interests. An issue raised by the FMA in its 2016 report Replacing life insurance — who benefits?

Writing on behalf of its membership, the FSC’s CEO Richard Klipin says there are good grounds to exclude insurance from the scope of any CDR.

“We encourage further analysis of the costs for various sectors and entities so this can be a primary consideration in progressing a CDR with less risk of costs being transferred to consumers,” says Klipin.

“For some of the smaller financial services firms the compliance aspects will not be small, impose further obligations, and may be disproportionate.”

Southern Cross Health Society’s Stefan Azzopardi, Chief Finance Risk Officer at the private health insurer, says in his submission to MBIE that leveraging off the work that Australia has already done would be preferable.

…we have concerns about how a CDR would work for our industry…

“However, we have concerns about how a CDR would work for our industry given the sensitivity around personal/health information and the complexities of health insurance, including cover for pre-existing conditions which likely limit benefits, such as easily switching products/providers,” he writes.

“We therefore support the Australian approach of determining which sector the CDR should apply to via a designation. We’d be concerned at having a wider regime imposed on industries like ours without a lot more thought.”

An MBIE spokesperson says the consumer data right will be rolled out on a sector-by-sector basis, and is currently carrying out work to identify which sectors should be assessed first.