Fintechs tell Labor a credit report delay will entrench bank power

Labor’s push to delay a law requiring the major banks to put more customer data into credit reports will entrench the big four’s market dominance and keep the cost of personal loans unnecessarily high, five of the nation’s leading marketplace lenders have said.

In a letter to shadow treasurer Chris Bowen, the CEOs of SocietyOne, RateSetter, MoneyPlace, Harmoney and WISR said a further delay to mandating big bank participation in the ‘comprehensive credit reporting’ (CCR) regime will “continue to entrench a fundamental competitive imbalance between the big four and other lenders”.

The letter is a response to Mr Bowen’s move last week to call for a delay to CCR by 12 months to work out how customers in financial hardship should be dealt with.

“Fintech businesses such as ours can be a powerful force to drive competition and innovation in financial services, thereby helping to lower the cost of finance to businesses and households, increasing the availability of credit, and reducing financial exclusion,” said the five CEOs, whose companies have combined personal loan books of around half a billion dollars.

“The asymmetry of information between the ‘big end of town’ and new entrants is perhaps the single largest barrier to the growth of fintech in Australia, and to the continued dominance of the big four in Australia.”

Unlike small business lender Prospa, which lends at very high interest rates and whose float flopped last week after questions were raised about unfair terms in its contracts, the consumer fintechs operate under the national consumer credit legislation and are required to lend responsibly under contracts regulated by ASIC.

To read more, please click on the link below…

Source: Fintechs tell Labor a credit report delay will entrench bank power | afr.com