Have banks let down the community?

by Miklos Bolza27 Nov 2017
The recent government decision to mandate comprehensive credit reporting only came after certain banks refused to play ball and participate, a move which one major aggregator head has criticised as damaging to the public.

With two of the major banks failing to make any move of their own before the federal government stepped in, this has let down both consumers and the community, Clive Kirkpatrick, general manager of lending at Vow Financial, told Australian Broker.

While he acknowledged the reluctance may have been due to the banks holding onto market share, the government mandate will have positive benefits overall.

“If you think about it, the more information and the more data we get, you can actually make a better decision,” he said. “We get all this data around people’s expenses and past credit history and can actually make a better decision for that individual.”

With this added information, banks will be able to use more sophisticated credit policies focused on individual characteristics rather than using a blanket approach, he added.

“The banks hold more information than any other organisation except maybe some retail institutions. They know how much we spend, how much we earn, and on what, so they can actually use that data for good to help people rather than retaining it for themselves.”

This could save consumers and brokers a great deal of time and effort, Kirkpatrick said, especially if each bank’s credit operations actually compiled data themselves instead of relying on outside parties to make their final decisions.

“I don’t see an issue with [brokers] collecting more data around expenses but the banks have a lot of this information already. I’m not sure why they need to ask that again.”

With the onus square on the lender to find a suitable loan for each customer, there should be less reliance on the broker and more on the bank to collect this added information, he said.

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