By Mike Cutter, Equifax

Over the past three years, the words 'Banking Royal Commission' became part of Australia’s conversation about itself, starting as an argument about whether to have an inquiry and then later as we watched the court room drama of the 2018 hearings unfold. 

We now have the Royal Commission’s recommendations which leaves no one untouched, including regulators. The process is finished, but less certain is how the findings will be implemented; that task falls to whoever wins the May election. 

However, one thing became clear in 2018. The finance sector did not wait for Commissioner Hayne’s final recommendations before they acted.

Equifax saw that when customers asked us to assist them to find customer’s charged for fees for advice not given. It was in evidence again when the criticism over standardised household expenditure measures resulted in an appetite for more reliable and insightful techniques for assessing expenses.

There are challenges for existing business models and practices. Two of the most obvious include dramatic changes to mortgage broker remuneration and removing exemptions from the National Consumer Credit Protection Act/ responsible lending obligations for point of sale staff.

The answer will lie in innovation. The demand from consumers is still there; people want to renovate their kitchen and bathroom, to buy a new home or to purchase a new car – and they need credit to do that. The end of flex commissions in auto lending led to Equifax working with the sector, partnering on solutions to ensure lending continued. 

A decade ago new anti-money laundering requirements created a need for identity verification solutions. ASIC’s introduction of responsible lending guidelines led to new credit risk assessment solutions. Today new laws are before Parliament that will impact financial products, requiring documentation of why the target customer is suitable and ongoing monitoring of that market’s suitability. Compliance and regulation drive new innovations and that same approach will continue with the eventual implementation of the Royal Commission recommendations.

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