New credit system will challenge brokers and banks: expert

Mr Brown told The Adviser that consumers would want brokers to explain how their credit history would impact their ability to get credit under the new system.

"In a negative credit reporting system, that's a pretty straightforward task. But as we start adding the comprehensive data, the system becomes more sophisticated," he said.

New credit reporting rules were introduced to Australia in March.

Mr Brown said Australia could learn a lot from New Zealand, which made similar changes to its system about one year before Australia.

About 30-40 per cent of New Zealand credit files contain comprehensive credit data, compared to a rate of about two per cent in Australia, Mr Brown said.

"One of the lessons we can learn is that data sharing should happen sooner rather than later," he said.

"In New Zealand, it took some time for organisations to get their mind around what benefits would be delivered by comprehensive credit reporting and therefore it took a little while for the major banks to start providing their data."

Mr Brown said he expected change to be embraced more rapidly by smaller firms that sell single products, such as vehicle finance and personal loan providers.

He forecast that the big banks would probably be "last to the party", and would come on board in late 2015 or early 2016.

"The good news is that even without the large banks, we're still seeing good information that definitely makes a difference to lending decisions is starting to flow through the system," he said.

Mr Brown will be speaking at the Australian Retail Credit Association national conference on Friday.

[Related: Six months on, new credit rules yet to impress]