Three years: Credit reporting laws remain stalled


Denham Sadler
Senior Reporter

Despite Scott Morrison labelling it a “life-changing” reform in 2017 as the then-Treasurer, the federal government is yet to pass legislation that introduces a mandatory comprehensive credit reporting scheme more than three years after first announcing plans to do so.

The government has been planning a mandatory comprehensive credit reporting regime, with major banks and other providers required to provide credit information and active consumer credit accounts to eligible reporting bodies and FinTechs when requested, since early December 2017.

But the legislation underpinning this reform has been left lagging in Parliament and will remain there until at least February next year after the government failed to bring it up for debate in the last sitting fortnight of 2020.

The introduction of such a scheme has been heralded as a boon for local FinTechs, which will be able to better compete with larger financial players by accessing a “more balanced reflection of credit history” and giving consumers more control over their own data.

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Stalled: The mandatory credit reporting scheme is stuck

Mr Morrison, who was Treasurer at the time, announced that the government would be introducing mandatory credit reporting in late 2017, labelling it a “major milestone” for the fintech sector.

“It’s a game-changer for customers and lenders, and will lead to greater competition in lending and, naturally, provide better access to finance for Australian households and small businesses,” Mr Morrison said at the time.

“It will not only grow business and our economy, but it will change daily life. It’s a life-changing kind of change.”

But the government has since moved at a glacial pace in passing the required legislation.

Legislation lapsed in Parliament in the lead-up to the 2019 election and had to be introduced in December last year.

The bill quickly passed the lower house, with Labor promising to introduce a number of amendments in the Senate, and was introduced to the Senate in February this year, with plans to launch the scheme in April.

But the legislation has not been seen since, despite regularly appearing on the daily notice paper. It was not brought for debate in the last sitting fortnight of the year and will remain in Parliament over the Summer break.

Parliament does not return until early February 2021, when the legislation can be debated at the earliest, nearly a year after the credit reporting regime had been meant to have started.

The government, through Treasury, ran consultations on the legislation in August last year, but is still yet to release the submissions it received.

Under a mandatory comprehensive credit reporting scheme, banks would be required to hand over positive credit data on consumers, including how many bank accounts they’ve opened, credit limits and monthly repayments.

Concerns have been raised since the scheme was announced on the impact of such a scheme on vulnerable communities and how it will impact hardship rules within banks.

Labor flagged in the lower house that a number of amendments will be introduced when the bill is debated in the Senate, including to require banks to allow individuals to access a copy of their credit information for free every 10 days, for derived or generated credit scores to be disclosed to individuals and for individuals to receive statements summarising the key determinants of their credit score.

When introducing the legislation to the upper house, Minister for Aged Care Richard Colbeck admitted Australia was behind much of the rest of the world on credit reporting.

“This bill will place Australia in line with many other developed nations who already have comprehensive credit reporting regimes in place,” Senator Colbeck.

This will remain the situation for several months now, with the legislation being unable to be passed until February at the earliest. It’s unclear when the government now plans to launch the scheme after the legislation is passed.

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