New Mandatory Comprehensive Credit Reporting Laws for Lenders
Comprehensive Credit Reporting (CCR) was first introduced in Australia in 2014. However, later in 2018 the Australian Federal Government will introduce new laws which make it mandatory for our big four banks (Westpac, NAB, ANZ and CBA) to use CCR more fully and apply it when making credit assessments.
The introduction of CCR changed the type of consumer credit information that can be collected by credit bureaus and used by credit providers when making a lending decision. Previously, Australia only had a negative credit reporting system, which meant that a consumer’s credit report could only contain negative information such as credit enquiries, credit payment defaults and serious credit infringements like bankruptcy.
The new regulations will set out the circumstances when a credit reporting body must share credit information supplied through the mandatory regime.
The Government has issued a timetable to phase-in the mandatory changes and may mandate the inclusion of additional institutions, at a later date. An initial bulk supply of credit information will be required from large authorised deposit taking institutions (ADIs - the big four banks) and will be split across two years.
By 28th September 2018, large ADIs must supply credit information on 50 percent of the consumer credit accounts within the banking group to all credit reporting bodies they had a contract with, as at 2nd November 2017.
Following this transfer of current information, large ADIs must continue to keep the information supplied accurate, complete and up-to-date. This will include supplying information on subsequently opened accounts.
For you as a consumer, this means you may see additional information for some accounts on your credit file, but not for others. Comprehensive credit information that you may now find being listed includes payment history information and the amount and type of credit you applied for, like:
Date you opened a credit account
type of credit account (overdraft, credit card, person loan etc)
Date you closed an account
New and previous credit limits
Conditions relating to payments
Repayment history for the last two years
Information detailing default agreements
This new credit reporting environment won't be as pervasive as that in the US which is far reaching in terms of the financial aspects of US residents' lives. However, this move to a more comprehensive style of reporting could signal a more American-style system in the future.
Banks will be required to share 100% of mandatory data by 1 July 2019, and will also have a 90-day window to provide the new information to credit reporting bodies.
(Source: Connective Credit Services; Finder.com.au)
