2 November 2017

Mandating comprehensive credit reporting

The Turnbull Government will legislate for a mandatory comprehensive credit reporting regime to come into effect by 1 July 2018, to ensure good customers are rewarded with better deals.

Comprehensive credit reporting will give lenders access to a deeper, richer set of data, encouraging competition for small businesses and retail customers with positive credit histories.

The new credit reporting rules will improve the capacity of lenders to meet their responsible lending obligations. New entrants and small lenders, including innovative FinTech firms, will be better able to serve customers and assess borrowing capacity.

This is a game changer for both consumers and lenders, resulting not only in greater lending competition but also better access to finance for Australian households and small businesses.

In this year's Budget the Government committed to mandating a comprehensive credit reporting regime if credit providers did not meet a threshold of 40 per cent data reporting by the end of 2017. The figure is currently less than 1 per cent.

It is clear this target will not be met. This is why the Turnbull Government is taking action now to meet its commitment and provide certainty for industry and customers.

The four major banks will be the first to face the mandated reporting, given they account for approximately 80 per cent of the volume of lending to households.

This will allow smaller providers the flexibility they need to develop their systems, while still creating a critical mass of participating credit providers. The Treasury will consult with stakeholders on the nature and level of the threshold.

The four major banks will be required to have 50 per cent of their credit data ready for reporting by 1 July 2018, increasing to 100 per cent a year later. This is a timetable the Government believes is entirely achievable.

Ensuring the security and privacy of Australians' credit information will remain a key priority of the Government. The provisions built into Australian privacy law through the Privacy Act 1988 and the Privacy (Credit Reporting) Code 2014 and the oversight of the Office of the Australian Information Commissioner will continue to protect and preserve the privacy of Australian credit customers.

Today's announcement is yet a further demonstration of the Turnbull Government's take action now approach on financial services, delivering real benefits to Australians who rely on our banking system.