Credit industry primed for positive reporting ‘game-changer’


Sydney, Australia: 12 March 2014 – After a decade-long journey, the most significant reform to the Australian consumer credit industry in 25 years – a new comprehensive credit reporting (CCR) environment – begins today. 
Credit providers across the industry are primed to take part in this transformation and ensure their businesses are ready to benefit from CCR, according to Veda, leading provider of credit information and analysis in Australia and New Zealand.[1]
Nerida Caesar, Veda’s Chief Executive Officer, said today’s milestone marked the beginning of a long-term journey for the credit and banking industry.  
“CCR is a game-changer for the credit industry. Finally Australia is coming into line with other developed economies, including the US, UK and most of Western Europe.
“The amended Privacy Act and the new Credit Reporting Code agreed at the close of 2013 is a massive leap forward for Australia, striking a good balance between the rights of consumers and the integrity and accuracy of the credit reporting system,” Ms Caesar said.
“Veda has been at the forefront of the industry drive for change towards positive credit reporting. Not only have we worked at an industry level on the reforms, we have launched our Equifax Score[2] ranking – a personal credit score offering that helps consumers understand how they are viewed by lenders.”
Ms Caesar said while the reform has been mooted for some years, credit providers were working rigorously to implement operational changes within their organisations ahead of the change, which will transform the credit landscape.
David Grafton, Equifax's Executive General Manager – Credit Risk & Advisory Services, said it would take time to transition to the new system. Among the challenges for credit providers was the need to adapt their business practices and decisioning processes to meet the new requirements, he said.
“CCR promotes responsible lending by providing a more complete picture of a consumer’s credit activity. Industry will benefit from a more accurate view of risk, but in turn, credit providers will need to take steps to ensure data they share meets new requirements for compliance, like improved measures for consumers to correct information held about them.”
For the first time, credit providers will be able to see data such as the type and amount of credit a person has applied for, when credit accounts are open and closed and whether monthly repayments are paid on time. Over time, they will be able to view 24 months of repayment history on credit accounts.
Mr Grafton said Veda was well positioned for this transition to positive credit reporting, having drawn on insights gained from customers, a simulated CCR pilot study, as well as its international experience. 
“We know from our pilot study that additional CCR data improves the predictability of bureau scores by up to 27 per cent. This will improve accuracy and add significant value to decision-making,” he said.
“As well as gaining increased insights, there will be reduced risk and potential for improved profitability for credit providers from CCR. Based on international experience, those credit providers who make the transition to CCR early will gain market advantage. 
“It’s taken some time, but credit providers are realising the wide implications of operational changes required to make systems changes to meet compliance requirements for day one of CCR. Astute credit risk managers have developed transition strategies to enable them to be CCR adopters, and will evolve their business over time as CCR data grows.”
Mr Grafton said that based on current indicators, transition to CCR would commence in earnest in mid-2014 and the volume and mix of data will grow throughout 2015. Veda estimates 20 to 30 companies will embrace comprehensive reporting.
Under CCR, five extra data fields will be available, but many in the credit industry including Veda will continue to press for other important data to be included in the longer term, particularly repayment history for utilities and telcos, and account balances.
In the UK where CCR has been in place for many years, 20 data fields are shared (compared with 13 in Australia with CCR), so it is far more comprehensive.
Ms Caesar said that Veda would continue talking with industry and government to improve the data sets, as this would stimulate product innovation in the market and further advance the cause of responsible lending.
“This is a significant milestone – but one step on a journey, not the destination. It will take the industry time to build towards maturity. We know from the New Zealand experience that it takes time for critical data mass to be achieved,” she said.
“It’s essential that all credit-related businesses prepare in earnest for the change, since we will all be set on the path from today and we need to work together to achieve a robust credit reporting system in the interests of both credit providers and consumers.
“Veda welcomes the long overdue introduction of CCR and congratulates the industry in reaching this significant milestone. We look forward to partnering with our customers through an exciting period of positive change,” Ms Caesar said.

[1] Veda is the leading consumer credit bureau in Australia with approximately 85% market share, according to IBISWorld.

[2] An Equifax Score (number between 0 and 1,200), summarises where a person stands on their credit history at a specific point in time. The higher the Equifax Score, the better an individual’s credit worthiness. Veda is the only credit bureau in Australia to offer this ranking to consumers.