Peer-to-peer lender RateSetter called on brokers to help combat misunderstanding and fear about changes to credit reporting. It said yesterday that its research found that only one-third of people have any knowledge of the impending changes to how credit records are shared.
The lender’s research shows that to achieve positive outcomes under comprehensive credit reporting, consumer awareness needs to be significantly improved, given that two-thirds of people (67%) are unaware of these changes.
“Although it took mandatory regulation to bring the big four to the party, we applaud NAB for this week being the first of their peers to take the leap into CCR,” said RateSetter CEO Dan Foggo.
“Now the job of the government and the financial services industry is to communicate the benefits of CCR so people are encouraged to shop around for a better deal on borrowing.”
Foggo said brokers have a key role to play in this education process.
But FBAA executive director Peter White said banks themselves have to take responsibility for explaining changes to credit reporting to their consumers.
“Under the Consumer Law, it’s not the brokers that are required by the NCCP to do that,” he told Australian Broker.
At the same time, brokers need to ensure they are knowledgeable of CCR and the issues around it because they are dealing with credit matters, he said.
“They have to work closely with lenders to understand what the lenders are saying.”
Likewise, lenders have an obligation to brokers to make sure they are saying the right thing, he said.
White said last week that there is no chance consumers with good credit histories would get lower interest rates under the CCR regime, as touted by treasurer Scott Morrison when he introduced the CCR bill earlier this month.
“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 last week.
But White told Australian Broker yesterday that the new credit reporting regime will probably change behaviours positively.
“People need to understand that if they don’t pay their bills on time, if they don’t meet their duties and obligations, it has a negative impact,” he said.