Recent research has revealed that while 76% of brokers believe that comprehensive credit reporting (CCR) will have a significant influence on the mortgage decision process, an alarming 83% of consumers remain unaware of the changes currently being implemented or how their personal finances may be affected.
The CCR regime was implemented on 1 July 2018 with the intent to include positive data on credit reports in addition to the standard negative information available, such as missed payments, in order to provide lenders with a more complete picture of prospective borrowers’ finances.
While many view the change as a positive, others worry over the lack of consumer awareness and urge the industry to make a push for more widespread education.
Aaron Milburn, director of sales and distribution at Pepper Money said that the ongoing implementation of CCR measures has been "severely underplayed.”
“The natural rhythm of the market is changing, but consumers remain unaware,” he said, going on to cite the “horrific” transition to CCR in New Zealand, another market inhabited by under-informed consumers.
While the CCR regime is intended to benefit consumers, and certainly can under the correct circumstances, it can also have negative or complicating implications that consumers would benefit from understanding beforehand.
Pepper CEO Mario Rehayem recently spoke to Pepper’s emphasis on education across the board, for brokers and consumers alike, especially in the midst of current industry upheaval.
The CEO said that the big four’s “fluctuating appetite for who they will lend to” directly contributed to the climate that resulted in the royal commission.
However, it was not the commission proceedings themselves, but the lead up and public interviews that “spooked banks and customers and led to a clampdown”, a response that Rehayem stressed cannot be reversed and will have longstanding impacts.
Over the last year, Pepper has sat down with more than 3,500 brokers in one-on-one or group sessions to discuss how to best communicate with consumers to manage their expectations, inform them of the available products, and explain future regulatory happenings such as CCR.