Reforming Australia’s data-sharing regime, so it’s simpler, cheaper, and more practical for businesses and consumers would unlock productivity gains, according to the productivity inquiry.
The Productivity Commission (PC) has suggested that ‘rightsizing’ the Consumer Data Right (CDR) could improve how the open banking regime works.
On Friday (19 December), the federal government released five final reports from its five pillars of productivity inquiries.
The reports pull on feedback and data from the ongoing engagement with the inquiries over the year and put forward a series of final recommendations to support productivity growth across the economy.
Among the 47 recommendations put forward by the PC in the final report is a recommendation to improve how the CDR works.
The recommendation forms part of the commission’s final report into Harnessing data and digital technologies, which draws on industry submissions and consultation to assess how data access and digital tools can drive innovation, competition, and productivity growth across the economy.
The commission said that while Australia’s data-sharing initiatives – particularly CDR – are delivering value, they are not yet working as effectively as intended in real-world settings.
A mature data-sharing regime could add up to $10 billion to GDP, the report found, but only if existing frameworks are “rightsized” to better support high-value uses, while minimising unnecessary compliance costs.
Rightsizing the Consumer Data Right
One of the recommendations from the PC is a call for the Australian government to reform the CDR, so it works better for households and businesses in the sectors where it already operates – banking and energy – before expanding it further.
While uptake of the CDR has accelerated, the commission said the scheme’s current trajectory underscores both its potential and its limitations.
In the six months to June 2025, around 821,000 consumers used the CDR to facilitate 741 million data requests – a 55 per cent increase on the previous reporting period. If this trend continues, the scheme is expected to surpass 1 million consumers served in the next reporting period.
Use cases have grown to 197, with lending, credit, and broking leading adoption. However, the commission noted that broader and more diverse applications are still being constrained by the scheme’s complexity and rigidity.
The commission said the immediate priority should be simplifying the scheme by removing excessive restrictions and rules that are limiting uptake and practical applications.
Currently, the CDR imposes tight controls on how data can be shared and used, with consumers only permitted to share data for narrow, situation-specific purposes. Even after data is shared, it often remains subject to scheme-specific restrictions, including limits on how derived data can be used.
The report found these constraints were preventing CDR data from being used in ways consumers and businesses expect, particularly in lending, broking, and small business finance.
For example, consumers who share data with a personal finance app via the CDR may be unable to easily pass that same information on to a lender to support a loan or refinancing application. Similarly, small businesses can be blocked from using CDR data in basic tools such as reconciled transactions or cash flow forecasts.
To address these issues, the commission recommended that, within the next two years, the government enable consumers to share data with third parties of their choosing and simplify the onboarding process for businesses.
Under the proposed changes, once data is shared with a third party, it would be regulated under the Privacy Act rather than the CDR’s more restrictive privacy safeguards.
The commission said this reform would remove one of the key barriers to high-value use cases and significantly reduce compliance costs for accredited data recipients.
In the longer term, the PC said the CDR framework should be significantly amended, so it has the flexibility to support a broader range of use cases beyond banking and energy.
This would require making the accreditation model, technical standards, and sector designation process less onerous, while ensuring consumer protections remain robust.
The commission cautioned that not every data use case should be subsumed into the CDR, noting that private market data-sharing solutions will often emerge where competition and consumer demand allow.
Instead, the CDR should be used where structural or technological barriers are clearly preventing effective consumer data access.
Aligning privacy rules and unlocking government data
Beyond immediate changes to consent and onboarding, the PC urged the government to commit to more substantive reforms to the CDR framework.
These include aligning the CDR’s privacy safeguards with the Privacy Act and enabling access to selected government-held datasets through the scheme.
Submissions to the inquiry indicated that incorporating relevant government data could materially enhance the productivity benefits of the CDR. In particular, the Mortgage and Finance Association of Australia (MFAA) pointed to Australian Tax Office data as a potential inclusion that could improve access to credit and streamline lending processes.
The commission said feedback from industry consistently highlighted that the inclusion of government-held datasets could unlock new efficiencies in lending, verification, and financial decision making.
‘Open banking will only deliver on its promise if it works in the real world’
Industry groups broadly welcomed the Productivity Commission’s findings, with FinTech Australia saying the report reinforced concerns that open banking will only succeed if it works in practice, not just in policy design.
FinTech Australia CEO Rehan D’Almeida said the report clearly showed that data access via the CDR could boost innovation and competition, potentially creating productivity benefits worth up to $10 billion a year to GDP.
“The report has clearly cited open banking will only deliver on its promise if it works in the real world – for households and for small businesses – not just in policy theory,” D’Almeida said.
He said the commission’s recommendations closely aligned with reforms outlined by FinTech Australia in its submissions.
“First, we endorse a streamlined disclosure consent, so Australians can safely direct an accredited provider to share their data with a trusted third party of their choice. This removes one of the biggest blockers to high-value, everyday use cases and keeps control where it belongs: with the consumer,” D’Almeida said.
“Second, we support fixing nominated representative appointment barriers for SMEs. Today, businesses can face inconsistent, paper-heavy processes – including wet signatures and branch visits – that create major barriers, high drop-off, and prevent the CDR from being used as intended.”
D’Almeida also warned against fragmenting the scheme through carve-outs for smaller institutions.
“Finally, we oppose creating a de minimis exemption for small banks. Open banking works because it’s universal. Carve-outs would fragment coverage, disadvantage customers of smaller institutions, undermine competition, and risk pushing some consumers back toward less secure workarounds,” D’Almeida said.
He said decisions about the future of the CDR must remain focused on consumer outcomes.
“This is bigger than fintech. Every CDR decision must be centred on the consumer, empowering everyday Australians to make better financial decisions, whether they’re comparing products, applying for credit, or building confidence in their financial choices,” D’Almeida said.
[Related: Proposed open banking reforms spark industry backlash]
