ACCC Proposes to Grant Authorisation for Comprehensive Credit Reporting System
Tuesday 28 July 2015 @ 10.26 a.m. | Legal Research | Trade & Commerce
The Australian Competition and Consumer Commission (the ACCC) proposes to grant authorisation for five years to the Australian Retail Credit Association Ltd (ARCA) in relation to principles for exchanging comprehensive consumer credit data between signatory credit reporting bodies and lenders.
ARCA is the industry association for organisations involved in the provision, exchange and application of credit reporting data in Australia. Its members include credit providers and credit reporting bodies.
Background
In the past, only negative information such as defaults was allowed to be disclosed by credit providers. However, due to amendments made to the Privacy Act 1998 (Cth) in March 2014, positive information (comprised of repayment history information and information about the consumer’s credit accounts) is now able to be collected and disclosed. The reporting of both negative and positive information is referred to as Comprehensive Credit Reporting (Comprehensive Reporting). This information is used by credit providers (and consumers) to indicate an individual’s or business’ credit worthiness (such as in the form of a “credit score”).
ARCA seeks authorisation for itself and the signatories to the Principles in relation to the following provisions in the Principles:
- Reciprocity provisions: credit providers can only receive consumer credit information from credit reporting bodies up to the same level at which they are willing to supply information;
- Consistency provisions: credit providers must supply the same consumer credit information to all credit reporting bodies with whom they have a services agreement; and
- Enforceability provisions: procedures and sanctions to address non-compliance with the Principles.
The ACCC has received a large number of submissions in response to the application for authorisation from the industry, with general support for the application.
Commenting on this issue, ACCC Acting Chair Delia Rickard said:
“Better consumer credit information will allow lenders to make better credit decisions, with resulting benefits for consumers in the form of more competition among lenders and greater financial inclusion for consumers as well as less over-indebtedness. The ACCC considers that the provisions will help overcome a reluctance in the industry to share consumer credit information, facilitating a more complete exchange between credit providers and each credit reporting body. This will lead to increased competition both between credit reporting bodies and between lenders and assist lenders to comply with their responsible lending obligations at less cost.”
Industry Concerns
Veda Advantage Information Services and Solutions Ltd (Veda), the largest credit reporting body in Australia, is concerned that the Principles are too prescriptive and go beyond what is necessary to support Comprehensive Reporting. Veda submits that smaller credit providers could be placed at a disproportionate cost disadvantage compared to larger credit providers if they choose to fully participate due to the consistency obligations and enforcement costs associated with the Principles.
Ms Rickard said:
“The ACCC accepts that there are some potential public detriments arising from the costs imposed by the provisions. However, these costs appear to be relatively small and offset by the cost savings and other benefits of these provisions.”
Submissions Sought
The ACCC is seeking submissions from interested parties in relation to its draft determination, before making a final decision.
It should be noted that authorisation does not represent ACCC endorsement of the Principles. Rather, it provides statutory protection from court action for conduct that meets the net public benefit test and that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010 (Cth).
Broadly speaking, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
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Sources:
Application for authorisation lodged by Australian Retail Credit Association Ltd in respect of the Principles of Reciprocity and Data Exchange - ACCC Draft Determination
ACCC proposes to authorise system to facilitate comprehensive credit reporting – ACCC Release MR 124/15
