Labor will attempt to amend legislation paving the way for a mandatory credit reporting regime in the Senate after it finally passed through the lower house, nearly two and a half years after the scheme was first announced.
Legislation introducing mandatory credit reporting in Australia, which would require the major banks to provide credit information and active consumer credit accounts to eligible reporting bodies and FinTechs with permission, was debated and passed by the House of Representatives on Wednesday afternoon.
It was supported by the Opposition, but a number of amendments will be moved when it appears before the Senate.
Mandatory credit reporting was first announced by then-Treasurer Scott Morrison in late 2017. It was pitched as a boon for FinTechs and a way to give consumers more power over their own data. But the legislation was left stranded in Parliament in the lead-up to last year’s federal election, and wasn’t reintroduced until December.
Under the scheme, banks will have to provide positive credit data, like how many accounts have been opened, credit limits and monthly repayments in order to give a “more balanced reflection of credit history”.
It is hugely beneficial for the local FinTech sector, providing new opportunities and helping to level the playing field with the bigger banks. It lets FinTechs get a better picture of the risk profiles of potential customers, and enable them to offer more accurate risk-based pricing.
If passed, the mandatory comprehensive credit reporting regime would launch from April, with credit providers being unable to refuse to provide further credit or reduce a credit limit due to a consumer’s financial hardship information.
A review of the regime will be undertaken and completed by October 2023.
Shadow assistant treasurer Stephen Jones said in Parliament that Labor’s amendments in the Senate would include a clause requiring banks to allow individuals to access a copy of their credit information for free once every 10 days, for derived or generated credit scores to be disclosed to individuals, for individuals to receive statements summarising the key determinants of their credit score and for the Australian Information Commissioner to create rules in relation to these proposals.
“We support the general thrust of what is being proposed here but it is almost certain we will be moving some amendments in the other place,” Mr Jones said.
“Labor believes that there is a need to ensure that the current credit reporting arrangements allow for a more frequent and more detailed access to the information on behalf of consumers. We want to ensure that consumers are able to have access to the information that relates to them.
“These are propositions which are strongly supported by consumer advocates. Similar provisions currently exist in New Zealand and we don’t believe that on the information available to us they’ll impose any significant new costs on the credit reporting industry and will provide additional rights to consumers and competition benefits to the industry as well.”
Centre Alliance MP Rebecca Sharkie unsuccessfully moved an amendment focused on consumer rights concerns. It called on hardship information on credit reports to not be retained for 12 months as this was “unfair and will discourage people from seeking help from credit providers”.
“This bill may encourage people to seek out riskier forms of credit, such as high-cost payday loans that are trapping Australians in a cycle of debt,” Ms Sharkie said.
The amendment was voted down on voices alone, as the credit reporting legislation passed by the lower house.
Treasury ran consultations on the latest iteration of the legislation in August last year but is yet to release any submissions it received.