Is competition really a good thing?

Well, it would be if there was a central data repository for consumer credit information to be held for all credit reporting agencies to access. In this situation it would create a level playing field where lenders would have all access to the same information about potential customers, and credit bureaus would compete based on service to lenders. But this is not the case.

Given that the opportunity to make this type of structural change has seemingly passed, Veda is still the dominant force, and maintains a tight grip on consumer credit reporting due to history and the sheer size of its consumer database – it holds records for 20 million Australians and New Zealanders.

While we continue to use Veda for credit checking, there may come a tipping point in the future where ‘the completeness’ of Veda’s information will be questioned. With the major banks, including ANZ, Citibank, Commonwealth Bank, GE Capital, NAB and Westpac having invested in Experian, it’s in their interests to establish Experian as an alternative or preferred bureau in the medium term.

Hence, as Experian grows, the only way a lender will be able to be sure they’re getting a complete picture of a person’s credit history is likely to be by going to all the bureaus, which is not commercially viable or practical. While each lender has its own processes for meeting responsible lending obligations, clearly this may get harder to do in the future.