The government is calling for feedback on a discussion paper on the options for establishing a consumer data right (CDR) in New Zealand to better meet the needs of consumers and allow them more control over their data.
The consultation paper, released by the Ministry of Business, Innovation and Employment (MBIE) describes the proposed CDR as a statutory ability for consumers to securely share data that is held about them with trusted third parties.
This transfer of information is known as ‘data portability’. The third party could be another product provider or a separate entity such as a fintech provider. The data would be shared in a consistent machine-readable format so that it can be utilised by the third party for the consumer’s benefit.
The proposed regime mirrors the Australian federal government’s Consumer Data Right, which was announced in 2017 and came into effect earlier this year.
It is hoped the introduction of a CDR in New Zealand would allow local consumers to better harness the power of their data.
Hamish Grant-Fargie, Policy Director in MBIE’s Commerce, Consumers and Communications branch, said that establishing a consumer data right could deliver a range of benefits for both consumers and businesses.
“Creating a system whereby people consent to sharing their data with trusted third parties in a safe and secure way would provide consumers with access to a wider range of products and services,” Grant-Fargie said.
“We are considering options for creating a consumer data right, which would give individuals and businesses greater choice and control over the large volumes of data held about them by companies like banks and utilities.
“This would mean people can manage their finances more easily, compare products or services across multiple providers, and seamlessly switch between different providers without losing their data,” he added.
As businesses hold increasingly large volumes of data about consumers, the opportunities associated with using data more innovatively are potentially significant, according to Grant-Fargie.
“Giving consumers greater access to how their data is used will facilitate innovation and competition,” he said.
The discussion document said that during the response to the COVID-19 pandemic, the digital transformation of the economy has been accelerated as greater volumes of business and commerce are conducted online.
This also coincided with a rapid shift to contactless payments in traditional stores, it added, exacerbating concerns about the impact that merchant service fees are having on businesses, particularly smaller retailers, and the lack of competition in the provision of retail payment services.
“Establishing a CDR in the banking sector would enable the development of alternative contactless payment solutions that could provide greater convenience and security when consumers are shopping in stores or online,” it said. “This could help contribute to the ongoing COVID-19 recovery effort by reducing payment fees charged to retailers.
“This is just one possible example of where a CDR could lead to new products and services being developed to benefit individuals and businesses,” it added.
Broadly, the consultation asks whether a consumer data right is needed in New Zealand, and if so how it should be designed to ensure that consumer data is handled safely and securely.
The consultation is open until 5 October 2020.