Legislation to implement mandatory comprehensive credit reporting (MCCR) is progressing in the Senate, having already been passed by the House of Representatives.
the National Consumer Credit Protection Amendment (Mandatory Credit Reporting and other Measures) Bill 2019 introduces the MCCR. The previous 2017 bill to introduce MCCR lapsed at the end of the last Parliament, on 1 July 2019. The new Bill is slightly different to the earlier bill, in particular with regard to the setting up of a new scheme for reporting of financial hardship information in the credit reporting system.
The MCCR is being introduced because there was minimal take up of voluntary CCR introduced back in 2014. The Bills Digest No.83,2019-20 noted that in September 2017 the figure for voluntary participation in the CCR framework was less than 1%.
In essence MCCR will require large authorised deposit-taking institutions (“Large ADIs”):
- to supply 50% cent of its consumer credit information within 90 days of 1 April 2020 to all credit reporting bodies (CRB) with whom they had an existing agreement with on 2 November 2017;
- to supply credit information on their remaining accounts to the same CRBs within 90 days of 1 April 2021;
- to ensure that the information supplied is kept up to date;
- from 1 April 2021, to supply any financial hardship information about an individual if the ADI is disclosing repayment history information about the individual to a CRB as part of its credit reporting obligations.
The legislation also requires the Government to complete an independent review of the new MCCR regime and its provisions by 1 October 2023.
The expression “Large ADI” is defined in a determination made under the Banking Act 1959 (Cth).
The MCCR regime will be introduced progressively for other lenders and credit providers in due course. This will be done by way of regulation – declaring the entity to be an “eligible licensee”.
The Bill incorporates the results of a review by the Attorney General into the treatment of financial hardship information and facilitates the sharing of this information. If the changes had not been made, then credit default information reported under the new regime would have merely recorded a default had occurred, but without the necessary clarification that there was a financial hardship arrangement in place.
Federal Treasury has also recently released an exposure draft of the National Consumer Credit Protection Amendment (Mandatory Credit Reporting) Regulations 2020 for consultation along with a draft explanatory memorandum. The draft explanatory memorandum explains that the Regulations will support MCCR by setting out:
- additional circumstances when a bank subject to the regime must update or supply new credit information to a credit reporting body;
- restrictions on a credit reporting body disclosing the information it has received through the mandated regime or derived from this information;
- the types of information that must be included in statements provided to the Treasurer by credit providers and credit reporting bodies following the initial bulk supplies of credit information; and
- an additional circumstance when the Australian Securities and Investments Commission (ASIC) could issue an infringement notice for a civil penalty.
The implementation of the new comprehensive credit regime has been a long time in the making and as a consequence it cannot be predicted with certainty that 1 April 2020 will be the effective start date, given prior delays.