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Cliona O'Dowd
THE AUSTRALIAN
Business Reporter
13 September 2018

The big four banks will share their customers' full credit history with each other for the first time form the end fo this month in a landmark regime change that promises to overhaul lending practices across the nation.

National Australia Bank has already signed on to the new 'comprehensive credit reporting' system, which will add positive credit data to the existing negative data on borrowers.

The big four banks will share their customers’ full credit history with each other for the first time from the end of this month in a landmark regime change that promises to overhaul lending practices across the nation.

National Australia Bank has already signed on to the new “comprehensive credit reporting” system, which will add positive credit data to the existing negative data on borrowers. The three other majors are expected to follow suit in the coming days, with the data to be made available before the end of the month.

The new datasharing regime will allow lenders to better verify loan applications and assess credit risk by accessing the full repayment history of a potential customer, including their total debts.

It follows Scott Morrison’s move late last year to make comprehensive credit reporting mandatory, after lenders were slow to take up the voluntary regime which has been in place since 2014. That threat put the heat on the big four to get their systems up to date ahead of the deadline. As the government’s bill languishes in the Senate, the major lenders have pushed ahead with the changes following pressure from the prudential regulator.

ANZ yesterday said it had been testing positive data reporting since the end of June, although the data was not shared with the public at this stage. “Since we started this we have been testing our systems to ensure everything is working appropriately,” an ANZ spokesman said.

The big banks’ embrace of the new regime would put pressure on others to sign up, since only lenders who supplied comprehensive reporting to the credit bureaus would have access to the data, Australian Retail Credit Association chairman Mike Laing told The Australian.

“If they don’t join then the people who intend to borrow money but not pay it back will quickly find out which ones are not in the system and they’ll go to the lenders who don’t have access to verifiable data. So it’s risky for a lender not to take part once most of the data is in there,” Mr Laing said.

“A large section of the industry is already on the path to sharing but knowing that all the four majors are going to do it will give confidence to everyone else.” Citibank, HSBC and a number of fintechs such as Moneyplace and Ratesetter have already signed up to the new rules, while personal lender Latitude Financial is planning to go live in the fourth calendar quarter. “The reason the fintechs have been so keen is it makes their jobs much simpler,” Mr Laing said.

“They can get the data, profile customers’ financial position and assess risks a whole lot easier. Right now it’s difficult to verify the facts.”

Both lenders and customers with good credit history would benefit from the new regime.

Ninety five per cent of the initial account details supplied will be credit card accounts. “It is a big and technical project to make this happen and the rules state that when a bank joins it must supply 50 per cent of all of its accounts,” Mr Laing said. “The remaining 50 per cent can be supplied in the next 12 months. So banks are supplying credit card portfolios and then in the next year they’ll follow that up with mortgages and personal loans and the like.”   

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