CCR turns two, but progress awaits
March 2016 marked the two-year anniversary of the commencement of Comprehensive Credit Reporting (CCR) in Australia. But, within only four credit providers having adopted the regime, significant progress still lies ahead.
In Australia, credit information available to be shared between credit bureaus and credit providers was previously limited to ‘negative’ data such as credit applications and defaults. The CCR regime, introduced in March 2014, allows for sharing of ‘positive’ data, including account and repayment history information.
We see CCR as a game-changer for Australian consumers, boosting competition between lenders. It also ensures borrowers will be rewarded for their good credit behaviour through easier access to credit and a better, fairer deal. In our case, that means consumers will be able to access low rate personal loans and car loans all at the touch of a button.
However, despite a firm endorsement of the regime by industry commentators, regulators and the Financial System Inquiry, only four credit providers (including RateSetter) have commenced sharing and consuming CCR information with other credit providers under the regime. No major banks are currently sharing data with other credit providers.
Time to take action
In response to the slow uptake of CCR by major lenders, RateSetter and a number of other innovative lenders have called on the Government to take action.
Our CEO Daniel Foggo said “It’s really disappointing that out of hundreds of credit providers in Australia, only four have so far adopted CCR, despite the clear benefits to businesses and consumers. We think the Government should move forward its timeframe for implementing regulatory incentives.”
In response, the Government has commissioned the Productivity Commission to review the current level of credit data sharing and examine whether regulation may be necessary to encourage its wider adoption.
While we believe this review to be a positive step, we think that the 2017 deadline for the review is too long and that consumers shouldn’t have to wait for CCR’s third birthday to see further progress. We believe that it is in the Government’s interest to level the playing field for innovative new entrants like RateSetter, who are trying to deliver true risk-based pricing and provide consumers with a better, fairer deal. If you’re interested in submitting to the Productivity Commissions review, you can make a public submission.
This information does not constitute financial advice and you should consider whether it is appropriate to your circumstances before you act in reliance on it. Any opinions, forecasts or recommendations reflect the judgement and assumptions of RateSetter as at the date of publication and may later change without notice.