The Australian Government’s decision to mandate a comprehensive credit reporting regime should help Australian borrowers get a better deal from lenders and has followed strong leadership from Australia’s fintech industry.
FinTech Australia – the industry association for Australia’s fintech industry – today welcomed the announcement about comprehensive credit reporting by Treasurer Scott Morrison at the opening day of the Collab/Collide Summit in Melbourne.
Mr Morrison announced that the government would legislate to ensure that lenders are collecting and making available the positive credit history of customers, rather than just focussing on their negative history.
This followed by a promise by the government in May 2017 to introduce such a regime if lenders – and in particular banks – are not reporting at least 40 per cent of their data by the end of 2017.
Mr Morrison confirmed today that the 40 per cent target had not been met.
The four major banks will be the initial target of the new legislative framework and will be required to have 50 per cent of their credit data ready for reporting by 1 July 2018, increasing to 100 per cent a year later.
FinTech Australia vice chair and founder and CEO of Melbourne-based marketplace lender MoneyPlace Stuart Stoyan said the changes would level the playing field in favour of customers, by ensuring their positive credit history was front and centre when lending decisions were made.
He said the decision also followed a voluntary move by several members of Australia’s fintech community, including Ratesetter, MoneyPlace and SocietyOne, to introduce comprehensive credit reporting. Society One announced its decision earlier this week.
“Until now, a number of Australia’s big banks and lenders have not been sharing the positive data which should allow customers to get better credit,” Mr Stoyan said.
“Today’s announcement will help consumers get lower interest rates and better access to credit. This will especially help borrowers with a good credit history who make their repayments on time, rewarding their good behaviour with fairer rates.
“Although this reform has been a long time coming, today’s announcement is welcome news and follows the important and voluntary lead of a number of fintech lenders.”
“We are also encouraged by the Treasurer’s desire to extend CCR to include telcos and utilities. This will help ensure Australia has a world class regime.”
FinTech Australia has been advocating for comprehensive credit reporting since February 2016, when it published a detailed fintech policy paper.
Reporting positive credit information, and making it available to other credit providers on a secure and confidential basis, allows lenders to consider the positive attributes of a consumer’s credit history when assessing an application for credit, not just negative information such as payment defaults, court judgements and the number of credit application enquiries.
The Collab/Collide Summit is the final event in Australia’s Intersekt fintech festival being held in Melbourne from 27 October to 3 November. The State Government of Victoria is Intersekt’s presenting partner, with other partners including York Butter Factory, Stone & Chalk, Next Money and FinTech Victoria.