Consumer data right

What is a consumer data right?

The term ‘consumer data right’ describes a mechanism for consumers to securely share data that is held about them with trusted third parties. This could be another product or service provider or a separate entity such as a fintech.

A consumer data right will place consumers in the driver’s seat for their data, giving consumers access to a wider range of products and services. that better meet their needs. For small businesses, this could unlock more integrated, day-to-day services, including business monitoring, inventory management, reporting, e-commerce, and payment systems. This will facilitate competition, provide wider economic benefits. and help build the digital economy.

Several jurisdictions, including the European Union, United Kingdom, Singapore and Australia, have intervened in recent years to give consumers greater control over their data.

Aotearoa New Zealand’s consumer data right

On 5 July 2021, the Government decided to implement a legislative framework for a new consumer data right.

Primary legislation will create the overarching framework of the consumer data right, introducing basic obligations that will apply to those within a designated sector. Designations will specify the type of data that is covered and the functionality that is enabled.

On 1 August 2022, the Government agreed to explore banking as the first sector to be designated under a consumer data right. The Government also agreed to other aspects of the framework including consumer redress functions, compliance and enforcement mechanisms and cost recovery of the consumer data right.

Consumer data right in the banking sector

Also called ‘open banking’, a consumer data right in the banking sector would allow customers to consent to securely sharing their data with third parties that provide value-added services, such as payment services or financial analysis, helping them make better-informed financial decisions. For small businesses, this could unlock more integrated day-to-day services, including business monitoring, inventory management, reporting, e-commerce, and payment systems.

As the consumer data right will be rolled out on a sector-by-sector basis, other sectors may be considered for designation in the future. Some possible sectors include financial services, telecommunications, insurance, energy, and health.

Businesses will need to be accredited to use the consumer data right

A consumer data right will also strengthen existing protections, so the security and privacy of consumer data is vitally important. To protect the security of data transfers, consumer privacy and commercial confidentiality, third party data recipients will need to be accredited and a range of information protection safeguards will be introduced.

Consumer consent and control of their data is central to the consumer data right

Consent must be express (i.e. through a clear opt-in), informed and time-limited, and consumers must be given the ability to review and amend or withdraw consent at any time. Consent for any purpose beyond providing the goods and services the consumer has requested must be optional.

Consumers will be able to consent to:

• read access – the ability for an accredited party to read consumer data
• action initiation – the ability for an accredited party to carry out an action with the consent of a consumer.

Action initiation will allow consumers to, for example, ask a third-party payment provider to action a bank funds transfer from the consumer’s bank account to a business’s bank account when paying for a goods or services.

Next steps

Work is now underway on the design and cost of the consumer data right. This will be completed before any final decisions are made later this year.

Following this work, an exposure draft of a data sharing Bill is intended to be released for industry feedback.

Email consumerdataright@mbie.govt.nz if you would like receive updates on the consumer data right work, including when the exposure draft has been released for feedback.

Cabinet papers, Cabinet minutes and regulatory impact analysis

The Government’s decisions on a consumer data right and the supporting analysis is set out in the following documents:

Discussion document

In August 2020, MBIE released a discussion document on options for establishing a consumer data right in New Zealand. Consultation on the discussion document closed on 19 October 2020.

Read the discussion document

Further information

In 2019, the previous Minister of Commerce and Consumer Affairs engaged with the industry to advance sector-led open banking initiatives.

Read the letter to New Zealand banks (or ‘API Providers’) [PDF, 281 KB]

Read the Minister’s speech at the launch of the Payments New Zealand API Centre(external link) – Beehive website

Find out more about our work on regulating the retail payment systems.