Comprehensive credit reporting in Australia: A ‘game changer’ for consumers, lenders

NAB has committed to the comprehensive credit reporting (CCR) system, which sees banks sending both positive and negative data about a customer to credit bureaus. It comes after Australian treasurer Scott Morrison declared that banks will be required to share customers’ credit data from July 2018.

The CCR system allows all financial product providers to assess credit risk more accurately. Traditionally, Australian credit bureaus have only held default data for consumers.

The government had been pushing for big banks in Australia to embrace the regime. It has been voluntary for the past few years, and progress had been slow.

Now, the treasurer said it is time to require banks to hop into the system. During the Intersekt fintech festival in Melbourne, Morrison said the government intends to begin with the big four banks, provided they account for about 80 percent of the volume of lending to households.

“The banks will be required to have 50 percent of their credit data ready for reporting by 1 July 2018, increasing to 100 percent a year later,” he said, according to Business Insider Australia. He added that the government believes the timetable is “entirely achievable.”

For Morrison, the mandatory scheme is “a game changer for both consumers and lenders.” It is expected to motivate competition in lending from traditional as well as fintech players. It may also result in better deals on loans and improved competition in banking.

The regime is expected to benefit borrowers as it may lead to a better deal on their mortgage, personal loan or business loan. “If you have a good credit history, you’re paying down your mortgage, you haven’t missed a payment on your car loan and your credit cards are under control, you will be able to demand a better deal on your interest rates, or shop around, armed with your data,” Morrison said. The regime is expected to lead to better access to finance for Australian households and small businesses.

Australia’s big four banks will soon give the credit bureau more detailed data about their customers’ financial behaviour. The bureau only had access to negative information, like defaults on loans, before the credit reporting regime was introduced.

FinTech Australia vice chair Stuart Stoyan welcomed the news, saying mandatory CCR would level the playing field. There are also “discussions” currently in progress to pull telecommunications, electricity and gas providers into the CCR system, Morrison said.

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