Already a subscriber?Major banks are plotting to restrict access to data in consumer credit reports that non-bank lenders rely on to assess loans, a move that would smash the ability of many fintechs to accurately price credit and wipe out some players, according to four ASX-listed competitors to the big banks.
The start-ups have told the OAIC the changes will be “enormously detrimental” and a “setback hard-fought gains in industry competitiveness” after the fintechs have spent years building smoother digital application processes compared with major banks and have just reached profitability.
Under the proposed changes, the fintechs will no longer be able to tap a broad set of credit report data now available under a regime known as Access Seeker. This includes information on repayment history at other lenders and information on whether a customer has made a prior credit inquiry.These numbers are fed into proprietary pricing and credit risk models at the non-banks to determine whether a loan will be offered, and at what price.
The four companies say they are strong supporters of the “comprehensive credit reporting” regime and were each among the first credit providers and suppliers of consumer CCR data. They say arguments made by proponents of the changes, that the fintechs will be able to reprice offers once they do a full credit file check, are disingenuous as this could run foul of regulations preventing “bait and switch” pricing.