Today, the Ministry of Business, Innovation and Employment (MBIE) opened consultation on the highly anticipated exposure draft of the Customer and Product Data Bill – otherwise known as the Consumer Data Right (CDR). The Draft Bill and Discussion Document can be accessed via this link.
Who should read this? Why?
The draft law is relevant to all New Zealand businesses who collect and hold customer data. Implementation of the CDR has already begun to some extent in the financial sector on a voluntary basis, in what is commonly referred to as 'Open Banking'. Naturally, the Government has allocated the banking sector as the first cab off the rank for standardised data exchange – with a view to expanding this out to the energy, finance, insurance, and health sectors in due course.
What does it cover?
The Bill establishes a CDR which will allow individuals and businesses more control and use over their data. The purpose of the Bill is to increase competition and ultimately benefit consumers through reduced prices, improved product offerings and greater productivity.
The Bill is an important step in unlocking the value of customer data for people and their businesses by:
- improving customers access to, and control over, their own data;
- allowing for customers to request that their data be exchanged in a standardised way; and
- ensuring those who access data using the draft law are accredited as trustworthy.
In practical terms, it will give customers the power to ask that a business share their customer data with another trusted business in a safe and secure manner. The draft law will complement existing Privacy Act protections and data security measures.
Our view
CDR will create significant benefits for customers and businesses, and should facilitate competition and innovation.
However, the introduction of the new law will also create new compliance obligations requiring significant IT and regulatory efforts, which will likely be expensive in both time and cost. As such, organisations should turn their minds to what changes may be needed to their current operations to give effect to this new law.
There will also be a lot of detail to get to grips with in the legislation. Further, the Bill is primarily a framework with much of the detail to be set out in regulations. Industry engagement will need to be ongoing to ensure that designations and frameworks are fit-for-purpose.
As just one example of the issues to grapple with, in terms of territorial scope for overseas agencies, it is unfortunate that the Bill proposes to continue the use of a 'carrying on business in New Zealand’ threshold. As explained in a recent academic article Carrying on Business in New Zealand: an Uncertain Frontier in a Digital Age (NZBLQ Vol 27 Dec 2022 1, Kavanagh and Yang), that test is problematic. The Courts have given that phrase different interpretations under different legislation and requires a fact-specific analysis in every case. The resulting ambiguity does not facilitate compliance.
What next?
We recommend organisations take the time to carefully review the draft Bill to understand how this may impact their operations and systems and provide written feedback to MBIE before submissions close on 24 July 2023.
MBIE is seeking input from interested parties on the draft law, with particular focus on four key issues:
- Respect for customer authority (i.e. requirements for consent)
- Care of data during exchange (i.e. rules around data exchange)
- Trust of those who access the data (i.e. who can be accredited to receive data?)
- The future (i.e. what opportunities or concerns may arise following implementation?)
MBIE are also running a number of consultation workshops over the coming weeks via webinar, which we encourage interested parties to attend to gain a better understanding and insight into the draft law. If you want to know when those are scheduled to take place and sign-up, click here.
If you any have questions regarding the Bill or require assistance in drafting a submission to MBIE, please feel free to get in touch with one of our subject matter experts.
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