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Comprehensive Credit Reporting

NAB has kicked off Comprehensive Credit Reporting (CCR) for personal loans, credit cards and overdrafts, well ahead of the scheme’s expected implementation in July.

It is the first major bank to comply with the new proposed rules.

Treasurer Scott Morrison introduced a bill on 8 February mandating CCR across the major banks from July, with penalties as high as $2.1m per breach for failure to report detailed customer credit history to the credit bureaus.

Banks traditionally provide negative information for Australians’ credit reports, specifically detailing rejections and defaults. However, this has limited the reports’ usefulness to competitors of the big banks.

Under the new regime, banks will also have to provide positive credit information on borrowers.

According to Morrison, CCR will allow customers with good credit histories to obtain lower interest rates on loan products, but some industry players disagree. FBAA executive director Peter White, said last week that there is “no chance in hell” this would happen.

“What will happen is that banks will maintain their current interest rate margins for customers with a better credit file and increase the rates for those who have been through past difficulties under the guise of being of lesser quality or higher risk,” said White.

He noted this normally affects customers who can least afford to pay higher interest rates, exacerbating their problems.

Still, NAB believes a comprehensive view of customers’ credit situations will help the bank ensure clients receive the right type and amount of credit. Chief operating officer Antony Cahill, maintains CCR is good for competition and that it will mean better outcomes for customers.

“Under CCR, we now have a more holistic picture of a customer’s credit situation, so we’re better able to make sure our customers receive the right type and amount of credit for their individual circumstances,” said Cahill.

NAB first announced the scheme in October 2017.

While non-major banks and other lenders are not required to participate, draft legislation will include the power to extend the mandate to cover other credit providers in future.