A newly formed credit reporting agency is set to change the nature of credit reporting in Australia.
UK credit reporting giant Experian plans to enter the Aussie market. The company proposes to form a joint venture “Experian Australia Credit Services” with leading financial institutions ANZ, Citibank, Commonwealth Bank, GE Capital, NAB and Westpac. Experian will own 76% of the company, with the financial institutions owning the remaining 24%.
Reporter for The Australian, Teresa Ooi ran the story on Friday, titled Experian Plans Credit Bureau in Australia. Experian’s newly appointed managing director, Kim Jenkins says the venture will increase bureau competition, drive innovation and deliver better services for clients and consumers.
The aim of the new bureau will be to improve credit reporting efficiency, particularly in light of forthcoming plans to permit positive credit reporting, which is currently under consideration by the Government.
“The prospect of an inclusive bureau in Australia, accessible to all industry sectors, will strengthen standards in credit reporting, data quality and governance — which is particularly important in a changing regulatory environment,” Ms Jenkins said.
I believe the introduction of Experian into the Australian credit reporting system will increase competition, and can only improve efficiency and transparency. The changes which will occur when or if we switch to a positive credit reporting system will be well serviced by a company who has had years of experience with the system in the U.K.
What does concern me, however is the joint venture with leading Australian financial institutions. Does a credit reporting agency remain neutral when its owners are effectively creditors? Since creditors are responsible for listings on a credit file in the first place, does that create a conflict of interest for Experian in providing objective credit reporting?
The other question is, how much say will these financial institutions actually have? Currently Australian law gives a bigger voice to smaller shareholders in a company. With these institutions all having a common interest as ‘creditors’ and all having a smaller share in the company – where will the interests of the company as a credit reporting agency actually lie – with consumers or creditors?
Perhaps our current credit reporting laws will be tough enough to ensure that all credit reporting remains neutral, regardless of the ownership of the company.
It will be very interesting to see what develops from this issue.