COBA says consumers stand to benefit from the Turnbull Government’s decision to nudge major banks to participate in comprehensive credit reporting (CCR).
“COBA welcomes Treasurer Scott Morrison’s announcement of a CCR regime from 1 July next year, starting with the four major banks,” said COBA Acting CEO Dominic Dunn.
“As the Treasurer notes, other lenders are likely to follow suit quickly to improve their competitive position and their credit decision making.
“COBA’s position is that participation in CCR should be voluntary for smaller lenders because they have more of an incentive to participate than the largest lenders and should be able to do so according to their own priorities and resources.
“The landmark Financial System Inquiry (FSI) report in 2014 found that the net benefits of participating will differ between different classes of credit provider. For a major institution with a relatively large customer base, early participation may provide, at least initially, relatively larger benefits to smaller participants than for the institution itself.
“But as participation and system-wide data grow, net benefits increase for all CCR participants.
“CCR has the potential to increase competition because lenders will have more information about consumers, which means they will be able to better match credit types and amounts to borrower capacity. Lenders will have capacity to more accurately price credit relative to the risk profile of the borrower.
“The banking market is an oligopoly and regulatory interventions must be designed to give the competitive fringe of smaller players every chance to take on the major banks.
“The Treasurer’s announcement on CCR is consistent with this approach. Regulatory compliance costs have a big impact on the competitive capacity of smaller players.”
