The National Consumer Credit Protection Amendment (Mandatory Credit Reporting and Other Measures) Bill 2019 passed through Parliament on 3 February.
Under the bill, a new mandatory comprehensive credit reporting regime will be established, whereby credit providers from 1 April 2020 must provide credit information on consumer credit accounts to credit reporting bodies.
Further, credit providers cannot refuse to provide further credit or reduce a customer’s credit limit merely because financial hardship information exists.
Customers will also be able to access their credit files for free every three months, while credit reporting bodies will also be mandated to share a consumer’s credit score range and an explanation of the input information that determines the credit score.
The new laws will also create a new category of credit information that will enable financial hardship information to be reported alongside repayment history.
Lenders will only have access to this hardship information in situations where the customer is seeking to access new credit, or the customer agrees to the information being provided.
In addition, the scheme aims to offer customers greater financial transparency and protections.
Commenting on the bill’s passage, Treasurer Josh Frydenberg said the strengthened regime will deliver benefits to lenders and borrowers and drive competition in the lending market while preserving and enhancing important security and consumer protections.
“Australia’s largest banks will now be required to participate fully in the credit reporting system in order to provide more Australians with better access to credit,” Mr Frydenberg said.
“With a deeper, richer set of credit data, consumers will be able to demonstrate their creditworthiness and seek a better deal, while lenders will have greater opportunity to compete for customers with positive credit histories.
“Consumers experiencing financial difficulty can now better demonstrate their creditworthiness through a more accurate reporting of their circumstances.”