It believes the review is "long overdue"
The Australian Retail Credit Association (ARCA) has welcomed the government’s announcement of an independent review of Australia’s credit reporting framework.
“This review of the law is long overdue,” said Richard McMahon, general manager for government and regulatory at ARCA. “It’s been 12 years since the law covering credit reporting was put in place, and a lot has changed since then.”
Credit reporting, which entails the gathering, sharing, and utilisation of consumer loan information by credit bodies, is instrumental in the assessment of loan applications and the support of customers facing financial difficulties.
The process is governed by strict regulations to ensure the protection of individual privacy, while also serving as a fundamental component in bolstering the economy, fostering lender competition, and enhancing consumer choice.
“Credit reporting gives lenders quick access to an objective source of truth about possible borrowers, reducing costs and removing barriers to credit,” said Elsa Markula (pictured), chief executive at ARCA. “Consumers also get the benefit of their positive repayment history, giving them access to credit at lower rates.”
The framework for credit reporting underwent significant changes in 2012, introducing the inclusion of “positive” information, such as repayment histories, in credit reports. Since 2021, major banks have been mandated to report this positive information, which now covers over 95% of consumer credit accounts in Australia.
The upcoming review, set to be led by former Australian Prudential Regulation Authority (APRA) senior executive Heidi Richards, is mandated to deliver its findings to the attorney-general and assistant treasurer by Oc. 1, 2024.
Markula expressed ARCA’s readiness to support the review process, aiming to ensure the legal framework reflects the decade’s advancements, international trends, and the evolving credit market.
ARCA advocates for a review that could enhance the credit reporting system by advocating for more detailed and timely data provision, which could lead to improved decision-making by credit providers and, consequently, benefits for consumers.
Moreover, ARCA proposes the consideration of more customised datasets for specific sectors like telecommunications, utilities, or debt collection, suggesting that a more tailored approach could more accurately reflect the diversity of credit providers.
As the creator of the Credit Reporting Code, a legal code endorsed by the Office of the Australian Information Commissioner, ARCA plays a significant role in the regulatory framework of credit reporting. Through its subsidiary, it also oversees the Principles for Reciprocity and Data Exchange, ensuring a balanced exchange of information among credit providers.
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