Jason Falinski (Mackellar, Liberal Party) Share this | Hansard source

I appreciate the opportunity to speak on the bill. I also appreciate that this time the member for Whitlam has decided to agree with us without moving an amendment, so we are finally making progress in the House.

The National Consumer Credit Protection Amendment (Mandatory Credit Reporting and Other Measures) Bill 2019 will deliver benefits for both consumers and credit providers, and increase competition in the lending market by reducing credit data advantage held by the major banks. Comprehensive credit reporting seeks to achieve several benefits both for credit providers and for consumers. Consumers will have better access to consumer credit, with reliable individuals and small-business owners drawing on their credit history to seek more competitive rates when purchasing credit. In addition, consumers that possess a poor credit rating will also be able to demonstrate their credit worthiness through future consistency and reliability.

Credit providers will have the ability to obtain an accurate and comprehensive picture of a consumer's financial situation. This will enable providers to better meet their responsible-lending obligations and price credit according to a consumer's credit history. As the member for Whitlam pointed out, schedule 1 of the bill means that the five largest banks will be required to supply 50 per cent of their comprehensive credit information to credit-reporting bodies within 90 days from 1 April 2020. The information on the remaining accounts must be supplied within 90 days from 1 April 2021.

The security of consumer information is of high importance to the government. The Privacy Act already has strict provisions that apply to how consumer credit information is handled. The bill maintains these provisions, and also requires credit providers to satisfy themselves that a credit-reporting body is meeting reasonable security standards before they supply consumer data. The bill also requires the credit-reporting body to store credit information within Australia and external territories or according to alternative security requirements in regulations, if established, for storage outside Australia. The Australian Securities and Investments Commission will enforce the new mandatory regime. Where credit providers and credit-reporting bodies are subject to requirements under the bill they will be subject to penalties if they fail to comply.

The second schedule of the bill will establish a new type of credit information—financial hardship information—in the Privacy Act to allow reporting of consumer credit contracts affected by hardship arrangements, with hardship indicators to identify such circumstances. To ensure consumers are not being unfairly disadvantaged by this change, the bill will amend the credit act to prevent banks from using financial hardship information as the sole reason to freeze an existing credit account or to reduce a credit limit on an existing credit account. The bill will also prevent credit-reporting bodies from incorporating financial hardship into credit scores. The Office of the Australian Information Commissioner will continue to oversee the credit-reporting system, including receiving and attempting to receive complaints about mishandling of credit information or inaccurate credit information. The OAIC also has the power to investigate, order compensation and issue fines. The bill also requires the government to complete, prior to 1 October 2023, an independent review of the mandatory regime and the credit-reporting provisions, including the impact of hardship-reporting requirements.

The state of Georgia in the United States, for reasons known only to them, decided to ban credit-reporting bureaus until the year 2004. When they finally legalised this form of credit reporting, it allowed people, banks and financial institutions in that state to massively increase the amount of credit available to consumers by over 50 per cent, reduce margins by over half to all consumers, and to grow the economy in Georgia by an above-average rate for the next decade and a half. Credit reporting is key to what the financial services sector does in order to make sure that our economy gets to grow, in order to ensure that people are able to live their lives to the full capacity they want to live them.

This parliament now insists—in my view dangerously, but nonetheless—that financial institutions are responsible for the decisions that consumers make in terms of whether they can or cannot afford the credit that they have decided to borrow and that that falls solely on the financial institution, which they're doing. This parliament has hamstrung financial institutions from doing that by only allowing them to have limited information in terms of credit scores. It has also stopped third-party people from being able to provide applications and services which allow them to help consumers break through the complexity of our financial system to find the best products that they want.

This bill and the reforms contained within it are critical to us delivering a better life for millions of Australians who have been denied credit, who have been denied the best form of credit that they can have and who sometimes have been provided with credit they should not have taken. I commend the bill to the House.

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