CCR legislation introduced into Australian Parliament

Under the National Consumer Credit Protection Amendment (Mandatory Comprehensive Credit Reporting) Bill 2018, the big four banks will be required to provide 50 per cent of their CCR data to credit reporting bodies by 1 July 2018. This will increase to 100 per cent in 12 months.

Treasurer Scott Morrison previously said that the CCR scheme could result in “better deals” for customers, as it will enable lenders to access both positive and negative credit reports, and therefore price loans accordingly.

The Treasurer additionally said that the CCR scheme will boost competition by providing access to a richer set of data so that lenders of all sizes, including new entrants, can compete for small business and retail customers with positive credit histories.

“Lenders have had the ability to share comprehensive credit information on a voluntary basis since 2014, but have failed to do so. The major banks have failed to join and provide the critical mass necessary to attract other credit providers into the system,” Mr Morrison said.

“[O]nce the major banks begin supplying information, strong commercial incentives will encourage other lenders to participate.”

The amended national consumer protection legislation also places new obligations on the major banks to ensure the handling of customer data remains confidential and secure, and on credit reporting bodies to ensure the data is securely stored.

The Attorney-General will also be leading a comprehensive review of the operation of financial hardship arrangements under the Privacy Act after concerns were raised by industry and consumer advocacy  groups about what impact mandatory CCR will have on Australians who have previously experienced financial hardship due to unforeseen circumstances.

The Australian Banking Association, for example, called on the government to ensure the banks are able to provide detailed explanations of a customer’s circumstances, especially if they’ve missed repayments in the past.

“There needs to be an easy way to flag this in a customer’s history to ensure they aren’t unfairly denied access to credit when they have ticked all the right boxes by working with their bank when encountering problems paying back their debts,” ABA CEO Anna Bligh previously said.

“People can fall into financial hardship for many reasons, such as natural disasters, prolonged drought, the loss of a job or the death of a partner.”

While a number of smaller lenders are already participating in the CCR scheme, the National Australia Bank last month became the first major bank to begin utilising CCR, rolling out the new system for personal loans, credit cards and overdrafts, with plans to extend it to other products.

“Under comprehensive credit reporting, we now have a more holistic picture of a customer’s credit situation, so we’re better able to make sure our customers receive the right type and amount of credit for their individual circumstances,” NAB COO Antony Cahill said in February.

“We believe CCR is good for competition and will mean better outcomes for customers.”

The review into special payment arrangements is expected to be complete by late 2018.

[Related: Why positive credit reporting is such a big deal for our industry]