THE Australian Retail Credit Association (ARCA) welcomes the certainly provided by the Federal Government’s announcement that it will introduce a mandatory comprehensive credit reporting regime.
ARCA Executive Chairman Mike Laing said, “This announcement is a significant milestone that will positively transform credit reporting for both lenders and consumers.”
Today, the Turnbull Government announced that it will introduce a mandatory comprehensive credit reporting regime for the four major banks. The regime will require the four major banks to share fifty percent of their comprehensive data by July 1 next year, and the remaining 50 percent by July 1 the year after. The Government also intends to consult further on whether to mandate additional institutions on a phased in basis.
To enable the mandatory regime, the Government has also announced that it will rely on the industry led and administered framework for the sharing of data.
As the peak body for the consumer credit industry, ARCA developed and administers the industry based data sharing framework, the Principles of Reciprocity and Data Exchange (PRDE). The PRDE is a principles-based framework which enables signatories to share positive information, such as on-time loan repayments, as well as negative data.
“These industry principles are critical to realising the benefits of comprehensive credit reporting and ARCA is pleased that the Turnbull government has confirmed that it will rely on them to implement its mandatory regime,” Mr Laing said.
Comprehensive credit reporting has been globally recognised for increasing the availability and affordability of responsible credit to borrowers. Positive information will improve the ability of credit providers to assess a consumer’s true credit capacity and make better lending decisions.
“ARCA looks forward to working collaboratively with Government, on behalf of our members and industry, as the Government drafts legislation enabling its announcement. We will continue to encourage and educate industry and consumers alike to better understand the benefits of comprehensive credit reporting and the PRDE,” Mr Laing said.
ARCA is the peak body for retail Credit Providers and Credit Reporting Bodies in Australia. ARCA promotes best practice in credit risk assessment and responsible credit, as well as promoting better standards in consumer credit reporting. ARCA takes a leadership role in encouraging the sharing of information to enable Credit Providers to better serve their customers.