Don't get left behind - take control of your CCR transition
Despite many delays in the adoption of Comprehensive Credit Reporting (CCR), being CCR-ready is essential to avoid costly and potentially sub-optimal participation when the need arises either because of government mandate or industry reaching critical mass.
International experience demonstrates that once critical mass of positive reporting data is contributed by credit providers, the effects of adverse selection can flow very quickly. Moreover, experience to date in Australia and New Zealand has shown that the timeline for an organisation to transition from deciding to proceed with CCR through to active use of the information can take anywhere from between six to eighteen months. Therefore it is essential that an organisation understands the series of tasks that are required to enable complete supply, consumption and use of CCR data.
Currently, there is little certainty about the likely date at which critical mass will be achieved in Australia. As is common in such large national change programs, a wide range of issues have emerged since CCR was legislated in March 2014. Government are currently considering the possibility of mandating participation in CCR, in lieu of industry reaching 40% coverage of credit data supplied, but the details of this are still being defined.
What will be important for all organisations affected by CCR is to have robust and well-considered plans for their response. In our experience, there is substantial merit in assigning an accountable senior executive with responsibility for CCR planning.
There are four areas that should be explored in preparation for CCR:
- Have all compliance issues been covered, such as issuing relevant notices to customers? This includes privacy consents in loan applications etc.
- How does internal data conform to the specifications in the Australian Retail Credit Association (ARCA) Data Standards?
- What issues need to be considered from the Principles of Reciprocity & Data Exchange (PRDE)?
- Level of signatory
- What is required to engage with a Credit Reporting Body (CRB)
- Technology Implications (data security, transfer protocols)
- How will the organisation consume the CCR data?
- How well prepared are internal staff to be able to communicate CCR with customers?
- What other change management activities are required and which internal stakeholders need to be informed?
- What type of additional data is available from the CRB, and how does the organisation intend to use it?
- What are the internal system implications?
If an organisation considers all of these aspects then it will be well prepared to make a conscious decision about participating in CCR, rather than being subject to a hasty decision when either critical mass is achieved or there is a government mandate.
Be in control of your CCR destiny by being prepared and knowledgeable.