The Australian Automotive Dealer Association (AADA) has welcomed the decision by the Turnbull Government to legislate mandatory comprehensive credit reporting (CCR) from 1 July 2018.
Federal Treasurer, Scott Morrison, said the Government had made it clear in the Budget that CCR would become mandatory if credit providers did not meet a threshold of 40 per cent of data reporting by the end of this year.
He said less than one per cent of credit providers have met the threshold and it was obvious the target would not be met.
The Treasurer said the four major banks would be the first to face mandated reporting, given that they account for approximately 80 per cent of the volume of lending to households.
The banks will be required to have 50 per cent of their credit data ready for reporting by 1 July next year, increasing to 100 per cent in 2019.
AADA CEO, David Blackhall, said CCR will give lenders access to stronger data that will encourage competition for small businesses and retail customers with positive credit histories.
He said CCR will increase the level of information in credit files to allow competitors to the big banks to better assess risk and price products and to broaden assess to finance.
This includes identifying credit limits and loan repayment history to enable lenders to have a better view of customer risk profiles and potentially offer risk-based pricing that could be cheaper for consumers with good credit histories.
Mr Blackhall also urged the Government to work towards the creation of a national credit scoring system available to all license holders, similar to the model currently used in the US.