Heidi Richards
Attorney-General Mark Dreyfus has marked the 10-year anniversary of the introduction of Australia’s comprehensive consumer credit reporting system by calling for a review of the scheme to see if it remains effective.
Dreyfus issued terms of reference this week, appointing former APRA special projects director and now independent consultant Heidi Richards to conduct the review, which is to be handed to the government by October.
CCR was launched in March 2014, when credit reporting agencies were allowed to collect a wider range of information for their files.
Under the pre-CCR rules, a credit reporting agency could include the following information in a credit file: payment on a credit contract is at least 60 days overdue; a cheque for A$100 or more has been dishonoured twice; a bankruptcy order has been made against the individual; a credit provider considers that the individual has committed “a serious credit infringement”; and details of recent credit inquiries.
Under CCR, the following information could be added: the date a credit account was opened; the type of credit account opened; the date a credit account was closed; the current limit of each open credit account; and repayment performance history.
Richards will review the roles, responsibilities, powers and obligations of credit reporting participants, including credit providers, credit reporting bodies, regulators and consumers.
She will look at contemporary community expectations about privacy and security of credit information, whether the system facilitates access to finance and financial inclusion, whether it reduces the risk of financial hardship and whether it supports responsible lending.
CCR has had a chequered history. The industry lobbied for it for years but was slow to adopt it when it was introduced.
Adoption was so slow that the government introduced follow-up legislation to make it mandatory for large financial institutions to supply comprehensive data.
These days, comprehensive data covers all consumer finance products but it is not clear how many credit providers tap into CCR when making credit decisions.
Another issue for the industry has been poor data quality. The Australia Financial Complaints Authority and its predecessor organisations reported regularly over the years that they received a large number of complaints about errors in credit reports and that consumers found it difficult to get errors corrected.
And the biggest consumer credit bureau, Equifax (formerly Veda), has been in trouble with the Office of the Australian Information Commissioner a number of times over the years for poor practices.
Consumer groups have been strong critics of CCR in the past, arguing that it did more to enable predatory credit activities than support responsible lending.
Over the years, the industry has pushed for CCR to be updated so that more data could be added to credit reports. They have not made much headway, but this might be their opportunity.