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ACCC approval to transform credit in Australia

by James Mitchell11 minute read
The Adviser

The Australian Consumer and Competition Commission (ACCC) has approved a new principles-based industry framework that will transform consumer access to finance in Australia.

The new framework was developed by the members of the Australian Retail Credit Association (ARCA) and will come into effect on 25 December.

The industry developed principles, the Principles of Reciprocity and Data Exchange (PRDE), encourage credit providers and credit reporting bodies to share consumer credit information, arguing that more comprehensive information sharing will enhance credit outcomes for consumers, lenders and underpins a strong economy.

ARCA CEO Damian Paull said the ACCC’s decision was a major milestone in making credit reporting more comprehensive in Australia.


“As the peak body for the consumer credit industry, ARCA has championed the development of a voluntary industry-led framework for several years,” Mr Paull said.

“This new principles-based framework will remove a major barrier to participation in comprehensive credit reporting (CCR), and enables the industry to move forward and share information with confidence.

“A strong credit system underpins a strong economy and sharing comprehensive information encourages significant consumer benefits.”

ARCA noted that CCR has been globally recognised for increasing the availability and affordability of responsible credit to borrowers. The peak body pointed to a recent analysis in Australasia that showed lenders participating in CCR reported a 10 to 20 percent increase in approval rates for new-to-lender applicants.

The ACCC’s authorisation follows the federal government’s response to the Financial System Inquiry, which supported the industry approach to credit data sharing.

Prior to the 2014 reforms to credit reporting laws, only negative data such as late payments and defaults were included on credit reports, ARCA said in a statement.

“The inclusion of positive information will improve the ability of credit providers to assess a consumer’s true credit capacity and make better lending decisions,” it said.

“Over time this will lead to greater access to credit for some consumers who had previously found it difficult to demonstrate a good credit record and better tailored product aimed at ensuring that consumers are not given credit they cannot afford to repay.”

ARCA highlighted that the PRDE enables signatories to take advantage of the changes in the law and share positive information, such as on-time loan repayments, as well as negative data.

“These industry principles are critical to realising the benefits of comprehensive credit reporting as they create an open, transparent and standardised system for sharing credit data.

“The PRDE will deliver benefits to consumers and the wider economy,” Mr Paull said.

Sound credit decisions, based on a well-informed and realistic assessment of risk are essential prerequisites for financial stability and sustainable economic growth, he added.

“ARCA remains committed to supporting Australia’s innovative credit-providing sector as it transitions to this new system.”

[Related: ARCA educates borrowers on free credit repair]


James Mitchell


James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.