Gerard Brody, CEO Consumer Action

Letter to the editor: Credit reporting not great for the public

The fintech industry’s claims that delays in putting more customer data into credit reports will entrench the big four’s market dominance need scrutinising (‘Labor credit report delay will entrench banks: Fintechs’, June 15).

There is little evidence from overseas that sharing much more credit information leads to public benefits. New Zealand has had a comprehensive credit reporting (CCR) regime for a number of years, and its Privacy Commissioner recently released a report stating that while benefits have accrued to industry, there has been “limited evidence of benefits to individuals, the community and the economy”. The report argued that the intrusion of “CCR beyond the negative credit reporting system that has existed for decades cannot be justified simply by the interests of lenders”.

The fintechs are also obscuring the facts when talking of a delay to implementing the CCR regime. The proposed delay will apply to just one of the five data sets that form part of the regime. All stakeholders support sharing of four of the data sets which includes limits on credit cards and outstanding loans. This information should be visible to prospective lenders to enable them to lend responsibly and will also assist fintechs compete.

However, sharing of the fifth dataset, repayment history information, can operate unfairly to those who are dealing with instances of financial difficulty. This data set will require lenders to report where customers have missed repayments, and may operate even where people have made repayment agreements with their lender. Reporting people as in arrears when they are maintaining a payment arrangement agreed to by the lender is unfair, and is likely to discourage people from dealing constructively with their debts. It will also lead to more customer complaints and more distrust in our banking and finance sector.

Delaying the sharing of repayment history information to make sure there are not unintended consequences is the right thing to do.

Gerard Brody, chief executive

Consumer Action Law Centre

Originally published in the Australian Financial Review

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