Consultation Closes On Mandatory Comprehensive Credit Reporting Regime Exposure Draft
Friday 23 February 2018 @ 11.12 a.m. | Corporate & Regulatory | Legal Research
The public consultation on the exposure draft of the National Consumer Credit Protection Amendment (Mandatory Comprehensive Credit Reporting) Bill 2018 (Cth) closes today, Friday 23 February 2018. The Bill aims to implement the Turnbull Government’s proposal to implement a mandatory comprehensive credit reporting regime, allowing lenders to access to a greater amount of data and credit histories for individuals and small businesses.
In a media release issued in November 2017, Treasurer Scott Morrison said:
“The new credit reporting rules will improve the capacity of lenders to meet their responsible lending obligations. New entrants and small lenders, including innovative FinTech firms, will be better able to serve customers and assess borrowing capacity.
This is a game changer for both consumers and lenders, resulting not only in greater lending competition but also better access to finance for Australian households and small businesses.”
The Treasurer said the legislation was necessary, as the Government had “committed to mandating a comprehensive credit reporting regime if credit providers did not meet a threshold of 40 per cent data reporting by the end of 2017”. He noted that less than 1 per cent of data was currently being reported and that it was “clear this target will not be met”.
The Exposure Draft
The Draft Bill proposes to create a mandatory comprehensive credit reporting regime that would apply to “large ADIs (Authorised Deposit-taking Institutions) and their subsidiaries” from 1 July 2018. ADIs would be considered to be “large” where their “total resident assets” exceed $100 billion. In the media release, the Treasurer indicated this would apply to the four major banks, allowing “smaller providers the flexibility they need to develop their systems, while still creating a critical mass of participating credit providers.”
The regime outlined by the exposure draft is:
- Large ADIs and their subsidiaries will be required to supply credit information on 50 per cent of their active and open credit accounts by 28 September 2018
- Information on the remaining 50 per cent of accounts, plus any new accounts opened, will need to be supplied by 28 September 2019
- Information will then to be updated on a monthly basis going forward
These amendments would be enacted by inserting a new ‘Part 3-2CA – Licensees supplying credit information to credit reporting bodies etc’ into the National Consumer Credit Protection Act 2009 (Cth), and by making some consequential amendments to other parts of the Act.
The Australian Securities and Investment Commission (ASIC) would be responsible for monitoring compliance with the mandatory credit reporting regime. A review of the regime is scheduled for 1 January 2022, with an independent report to be tabled in Parliament.
The Bill also amends the Privacy Act 1988 (Cth) to restrict credit reporting bodies to storing the information they hold on a service in Australia, that is either listed by the Australian Signals Directorate of the Defence Department as a Certified Cloud Service under the program known as the Information Security Registered Assessors Program; or meets the conditions specified in the registered Privacy (Credit Reporting) Code 2014.
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Sources:
Exposure Draft: National Consumer Credit Protection Amendment (Mandatory Comprehensive Credit Reporting) Bill 2018 (Cth) and draft explanatory material, available from TimeBase's LawOne service
