SocietyOne: Changes to credit reporting will be “game changing”
The peer-to-peer lender started contributing comprehensive credit reporting data on 1 November.
Peer-to-peer (P2P) lender SocietyOne has welcomed the announcement from Federal Treasurer Scott Morrison to mandate positive credit reporting in Australia from next year. The change will see lenders such as SocietyOne benefit from having more credit data available to be able to make lending decisions.
"The benefits for consumers are huge as this will transform the opportunities for them to get a better deal when applying for loans and enable them to shop around for a better interest rate," said Jason Yetton, SocietyOne's CEO and managing director.
The changes to Australia's credit reporting system, which include the addition of two years of repayment history on credit files, were announced in 2014 but participation wasn't mandatory. A report from credit bureau Equifax released in April 2016 found that only 24% of lenders were participating in the regime.
When Morrison announced the changes at FinTech Australia's Collab/Collide Summit in Melbourne this week, he said the slow uptake was why the government had to make participation mandatory.
"In the Budget this year I committed to mandating comprehensive credit reporting if lenders did not reach a threshold of 40% data reporting by the end of the year," he said.
"But it is clear that this target will not be met. Less than 1% of CCR data is currently being shared in public mode. Which is why today I am announcing that the Turnbull Government will now be proceeding to introduce a mandatory comprehensive credit reporting regime from July 1 next year."
Banks will be required to have at least 50% of their credit data available for reporting by 1 July 2018. This will increase to 100% by July 2019. Morrison said the Big Four will be targeted first – "given they account for approximately 80% of the volume of lending to households," he said – and then other credit providers will "follow suit quickly" to improve their position in the market.
Lenders such as SocietyOne had already announced their participation in the regime from 1 November. The lender is just one of three consumer credit providers in Australia to make positive credit data available.
"By sharing all positive consumer credit data, the industry is ensuring all lenders are in a better position to assess a customer’s needs and meet all of our requirements under the rules of responsible lending," Yetton said.
“It’s time for the industry to get on with it. After decades of lagging behind the rest of the developed world, we now have an opportunity to make up lost ground for the benefit of all Australians and the country as a whole.”