A mandatory comprehensive credit reporting will be in place in Australia from July after legislation underpinning the scheme finally passed Parliament, more than three years after it was first announced by the federal government.
Under the scheme, major banks and other providers will have to hand over credit information and active consumer credit accounts to eligible reporting bodies and FinTechs on request. This will include positive credit data including how many bank accounts an individual has, credit limits and monthly repayments.
Comprehensive credit reporting is pitched as a significant boon to FinTech to assist them in competing with the big banks, and a way for consumers to have more control over their own banking data.
The policy was first announced by then-Treasurer Scott Morrison in November 2017, but legislation backing it lapsed in the lead up to the 2019 election. The bill was reintroduced to Parliament in late 2019 and quickly passed the lower house, but has been languishing in the Senate ever since, despite enjoying bipartisan support.
This delayed plans for the scheme to launch in April last year, with the government amending the bill to make the reporting kick off in some capacity from July this year.
From the end of September this year, the large banks will have to supply credit information on 50 per cent of the consumer credit accounts, and all of the information by September 2022.
This is more than a year after the government had planned to have the scheme up and running, and nearly four years after it first announced the policy.
The government also moved amendments to its own legislation in the Senate ensuring that financial hardship information can only be disclosed to credit reporting bodies when a consumer is seeking to access new credit.
The bill also ensures that consumers are able to access their own credit data for free, and can also access their credit rating and related information on request.
The government also pushed back the required independent review of the scheme to October 2024.
When introducing the legislation to Parliament in December 2019, Treasurer Josh Frydenberg said it would bring Australia into line with most other developed nations and benefit both lenders and consumers.
“Under the comprehensive credit reporting regime, consumers will have better access to credit and will be able to use their reliable credit history to seek more competitive rates. Those consumers who possess a poor credit rating will be able to demonstrate their creditworthiness through future reliability,” Mr Frydenberg said.
“Credit providers will have a more complete picture of a consumer’s financial situation. This will help them to better price credit and meet their responsible lending obligations.”