Consumers and businesses to be given more control of data under new laws

Consumers and small businesses will benefit from better deals and savings through innovative services, thanks to new Smart Data laws proposed by government.

Smart Data enables businesses to provide consumers with more intuitive, easy-to-use services such as better account and bill management, switching services for savings, and targeted support for vulnerable consumers, by allowing businesses to share customer data with authorised third-party providers in an easy and secure way.

For example, Smart Data has facilitated services that could alert a vulnerable consumer’s trusted contact (such as a family member or friend) if there is unusual activity on a bank account.

New laws will see more sectors, such as communications like broadband, taking advantage of Smart Data to drive competition and innovation, while providing more choices and lower prices for consumers.

The powers would make it possible for government to mandate industry involvement in Smart Data initiatives across the economy where they are not participating already, subject to sector-specific assessment and consultation.

"This government is committed to transforming our economy so pioneering businesses can thrive and consumers can save time and money," said Minister for Small Businesses and Consumers Paul Scully.

"Innovative businesses across the UK are already using Smart Data to find new solutions to age-old problems, revolutionising everything from invoicing through to automatic account switching."

"It’s vital we harness this technology across the whole of our economy. The roll out of Smart Data into new sectors such as communications will help support even more cutting-edge start-ups and could boost businesses and consumers by a staggering £18 billion a year," Mr Scully added. 

According to the government, a Smart Data joint government-regulator working group will also be set up to accelerate existing Smart Data initiatives and coordinate action across government.

This will involve representatives from Smart Data initiatives already in development, with individuals drawn from pioneering sectors including communications, energy, finance and pensions.

"As we have seen from other initiatives such as Open Banking, Smart Data can work to improve markets and help those who are financially vulnerable get better deals, taking some of the edges off their vulnerability," said Peter Tutton, head of policy, research and public affairs at StepChange Debt Charity.

"It’s absolutely essential that the emerging infrastructure delivers a secure, regulated approach to data sharing that doesn’t leave vulnerable consumers behind. In supporting those at risk of exclusion, this will bring a much needed joined-up approach across regulators and to Smart Data initiatives more generally."

The UK has led the way globally with Open Banking, the most advanced Smart Data initiative, which has helped more than a million users easily share their data with trusted third parties – in turn helping consumers and SMEs better manage their expenses, reduce administration and save money.

Research referenced by the government has shown that innovations by companies in the banking sector using Open Banking hold the potential to benefit consumers and SMEs by £18 billion every year for example by making it seamless to switch to the best deals and avoid fees.

In June 2019, the government launched the Smart Data Review to consult on expanding Smart Data beyond banking.

The response - Next Steps for Smart Data - published on Wednesday, sets out the government's plans to introduce primary legislation to make it possible to mandate industry involvement in Smart Data initiatives across the economy.