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This edition covers: Australian Institute of Credit Management
Volume 28, No 2
January 2021

The Publication for Credit and Financial Professionals   IN AUSTRALIA

Navigating 2021 requires
 a strategic approach.
This edition covers:
l Insolvency reforms and what credit professionals need to know
l How open banking will affect consumer credit decisioning
l How to get the best from your team in challenging circumstances
This edition covers: Australian Institute of Credit Management
71                                                                           74
    Qld: Your councillors celebrate Queensland winning the President’s trophy.   NSW: NSW Division celebrates with their Young Credit Professional.

      78                                                                           80
    SA: Networking evening at the Little Bang Brewery Company.                   Vic/Tas: Finally a Vic/Tas Council Face2face catchup.

Contents
    Volume 28, Number 2 – January 2021

                                                                                           6                     9                       13
    Message From the President                                                   4
                                                                                             Nick Jenkins      Adrian Floate MICM         Jon Sutton

    Credit Management
    Where to from here for Credit Risk Management?                               6
    By Nick Jenkins

    Strengthen your business systems now to prepare                              9
    for the unknowns of 2021
    By Adrian Floate MICM                                                                  18                    22                      24
    Top of mind for SMEs in 2021: paying down debt                               13        Patrick Coghlan
                                                                                                MICM
                                                                                                                 Richard Atkinson        Ashley Clayton
    and finding new ways to fund business
    By Jon Sutton

    ATO’s disclosure of business tax debts to credit                             18
    reporting bureaus
    By Patrick Coghlan MICM

    Consumer Credit                                                                        28                    31                      34
    ACCC misses opportunity to fine-tune open banking rules                      22         Jodie Bedoya       Clare Venema MICM         Michael Pearse
    By Richard Atkinson                                                                                                                      MICM

    Compelling conversations: Debt Collections                                   24
    Call Centres find value in speech analytics
    By Ashley Clayton

    How to use collector behavioural profiling to get                            28
    the best out of your collections team
    By Jodie Bedoya
                                                                                           38                    40                      46
    Open banking – Is it here to stay?                                           31         Fiona Reynolds        Tracy Rafferty         Andrew Spring
    By Clare Venema MICM                                                                        MICM                                         MICM

2         CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
This edition covers: Australian Institute of Credit Management
85                                                                  DIRECTORS
                                                                                                     ISSN 2207-6549

WA/NT: End of year Sundowner held at The Camfield, Perth.             Trevor Goodwin LICM CCE – Australian President
                                                                      Lou Caldararo LICM CCE – Victoria/Tasmania & Australian VP
                                                                      Rowan McClarty MICM CCE – Western Australia/Northern Territory
Leadership and High Performance                                       Gail Crowder MICM – South Australia
The golden rules of a great resume                               34   Peter Morgan MICM CCE – New South Wales
By Michael Pearse MICM                                                Debbie Leo MICM – Consumer
                                                                      Decia Guttormsen MICM CCE – Queensland

Legal                                                                 CHIEF EXECUTIVE OFFICER
Recent court decisions provide greater clarity on                38   Nick Pilavidis FICM CCE
how to deal with trust assets of a bankrupt estate                    Level 3, Suite 303, 1-9 Chandos Street,
                                                                      St Leonards NSW 2065
By Fiona Reynolds MICM
                                                                      PO Box 64, St Leonards NSW 1590
Harnessing the new anti-phoenixing laws to                       40   Tel: (02) 8317 5085, Fax: (02) 9906 5686
                                                                      Email: nick@aicm.com.au
maximise recoveries
By Tracy Rafferty                                                     PUBLISHER
                                                                      Nick Pilavidis FICM CCE | Email: nick@aicm.com.au
Insolvency                                                            CONTRIBUTING EDITORS
Insolvency reforms – what credit professionals                   42   NSW – James Smith MICM CCE
need to know                                                          Qld – Stacey Woodward MICM
                                                                      SA – Clare Venema MICM
Insolvency Reform 2021 – “the Good, the Bad and                  46   WA/NT – Jeremy Coote MICM
the Ugly”                                                             Vic/Tas – Michelle Carruthers MICM
By Andrew Spring MICM
                                                                      EDITOR/ADVERTISING
                                                                      Andrew Le Marchant LICM CCE
Masterclass                                                           Phone Direct 02 8317 5052 or Mob 0418 250 504
Measuring collection efficiency                                  50   Email: andrew@aicm.com.au

                                                                      EDITING and PRODUCTION
Training                                                              Anthea Vandertouw | Ferncliff Productions
                                                                      Tel: 0408 290 440 | Email: ferncliff1@bigpond.com
Which qualification is right for you?                            56   THE EDITOR reserves the right to alter or omit any article or
Recent graduates                                                 60   advertisement submitted and requires idemnity from the advertisers
                                                                      and contributors against damages or liabilities that may arise from
Virtual classroom training calendar                              60   material published. CREDIT MANAGEMENT IN AUSTRALIA is published
                                                                      by the Australian Institute of Credit Management, Level 3, Suite 303,
                                                                      1-9 Chandos Street, St Leonards NSW 2065. The views expressed in
2020 Virtual Awards Night                                        61   CREDIT MANAGEMENT IN AUSTRALIA are not necessarily those of
                                                                      Australian Institute of Credit Management, which does not expect or
                                                                      invite any person to act or rely on any statement, opinion or advice
                                                                      contained herein (whether in the form of an advertisement or editorial)
2020 National Conference                                         65   and neither the Institute or any of its employees, agents or contributors
                                                                      shall be liable for any opinion contained herein. © The Australian
                                                                      Institute of Credit Management, 2021.
Member Anniversaries                                             68
                                                                                JOIN US ON LINKEDIN
Division Reports
Queensland                                                       71
New South Wales                                                  74                         Click Here
South Australia                                                  78   EDITORIAL CONTRIBUTIONS SHOULD BE SENT TO:
                                                                      The Editor, Level 3, Suite 303, 1-9 Chandos Street,
Victoria/Tasmania                                                80   St Leonards NSW 2065 or email: aicm@aicm.com.au
Western Australia/Northern Territory                             85
New members                                                      88
                                                                            For advertising opportunities in

Credit Marketplace                                               90      Credit Management In Australia
                                                                                           Contact:
               January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA   3                    Andrew Le Marchant
                                                                       Ph: 1300 560 996 E: andrew@aicm.com.au
This edition covers: Australian Institute of Credit Management
aicm       From the President

                                                                                 Trevor Goodwin LICM CCE
                                                                                         National President

              O
                            n behalf of your AICM             online all to ensure making your team
                            Board and National Office         lockdown proof. Ensuring you leverage
                            team I welcome you to the         technology will enable businesses to
                            first addition of our Credit      move their credit teams to customer
              Management magazine for 2021. I thank           facing roles.
              members and their colleagues for your              Importantly we must be aware COVID
              support in 2020. I hope you all had an          isn’t going away. It’s going to continue for
              enjoyable Christmas and New Year and            a while yet until the vaccination is readily
              took advantage of some annual leave.            available. On top of that is the trade issues
                 2020 proved to be a difficult year for       with China.
              all of us with many challenges impacting           2021 will be a year where legislation
              us. But it was also a year of growth. Faced     continues to change and evolve,
              with hardship, we had to change the way         particularly the process of insolvency that
              we go about daily life and re-evaluate          has been reviewed. Stay connected to
              our priorities. In the process, we’ve           the AICM and make full value out of your
              strengthened our values, held on tighter        membership utilising our service to stay
              to the people we love and built a stronger      informed of the updates we will provide
              sense of community.                             throughout the year. Check out AICM’s
                  With a challenging start to the new         submissions page. We work hard for you
              year it will be one of budget repair for        to ensure you’re represented and we’re
              most businesses. The immediate focus            keen to hear your feedback.
              has been on survival: cost-cutting and             Our website is a ready reference for
              streamlining operations, implementing           you to not only stay aware of our policy
              new health and safety measures. In 2021         submissions made on your behalf but a
              it will be important to review how you do       source to check your CCE qualification
              business, revisit customer relationships        points. 100 points is the minimum
              and how you can support them for mutual         required to sit for your CCE while 30
              benefit.                                        points over a 3 year period is required for
                 A huge number of businesses have seen        recertification.
              their teams move to remote working, while          Our Councils in each division are
              surging e-commerce and social distancing        hopeful our social and educational events
              restrictions have curbed foot traffic in        will return to normal in 2021 through face
              many retail locations.                          to face attendance. These have proven to
                 Businesses will need to ensure they          be the best way to broaden your networks,
              have access to latest technology with           to connect and discuss credit and learn
              developments such as automation of              and develop.
              bank receipts, access to website for               Notwithstanding the desire for Face
              payment and having your contract with           to Face events COVID-19 caused the
              your customer digitised and available           need for holding webinars and zoom

       4    CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
This edition covers: Australian Institute of Credit Management
From the President

                                                                                                                    aicm
“Businesses will need to ensure they have access to latest technology
with developments such as automation of bank receipts, access to website
for payment and having your contract with your customer digitised and
available online all to ensure making your team lockdown proof.”

attendance in 2020 which worked well          seeing the expiration of the temporary
for the Institute under trying conditions.    moratoriums that had been put in place by
In 2021 our Institute will continue to        the government as a result of COVID-19.
present several new and very popular             From an Advocacy position AICM
online events via webinar for you with        will continue to follow through on
qualified speakers to keep you well           our doorknock to Canberra despite
informed. We have a number of 2020            the Parliamentary ban on visitors – all
webinars including financial hardship,        meetings with Ministers, Shadow Ministers,
diversity and mental health available for     Treasury and Attorney General officials
you to review if you haven’t already seen     will continue to be held via Zoom where
them.                                         needed.
   I, like many members am looking               In 2020 the AICM Board developed
forward to a return to a “normal” National    a new three year strategic plan outlining
Conference in October and we will be          five strategic priorities and initiatives
planning a conference not to be missed!       to support their implementation. These
Ensure you include the conference in your     included to grow membership, enhance
2022 financial year budget.                   learning and development, lift professional
   In 2021 we will see consumer credit        standards, strengthen our voice and
reforms crossing into small business. The     recognition and to improve operations.
Australian Small Business and Family          The strategic plan explains who the
Ombudsman (ASBEFEO) is offering               AICM is and outlined our purpose, vision
assistance and a voice for small business.    and promise to members through eight
Access to capital is an ongoing problem       pillars including education, professional
for small business. Easier access to          standards, advocacy, promotion of credit
capital will help small business to survive   professionals, events, communication,
difficult trading periods. We support the     governance and stakeholders. You will hear
governments draft amendments to the           more from us on our initiatives as the year
consumer credit framework that relate to      progresses.
small businesses.                                I am confident 2021 will be a year
   Already we have seen the new               when opportunity and innovation will
Payment Times Reporting coming                allow AICM members to reassess, regroup
into effect on 1 January requiring large      and rebuild. The Institute will continue
businesses with an annual income of           to be dynamic and at the forefront for
over $100 million to report on their          our members, providing education and
payment terms and practices for their         events ensuring a successful 2021 for the
small business suppliers. In addition, the    Institute.
commencement of 2021 has seen the
introduction of the significant changes to    Trevor Goodwin LICM CCE
Australia’s insolvency reform, while also     National President

                                                              January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA   5
This edition covers: Australian Institute of Credit Management
Credit Management

Where to from
here for Credit Risk
Management?
                                       Collection teams and risk managers        augment traditional financial data
By Nick Jenkins*
                                       face the prospect of challenges           and conventional assumptions with
                                       ahead as the COVID-19 pandemic            newer high-frequency information
                                       continues to drive changes to             and behavioural insights, credit
                                       the credit environment, customer          risk management may become
                                       behaviour and the global economy          significantly harder in the challenging
                                       into 2021. The next six months            times that lie ahead.
                                       are expected to bring continued
                                       economic uncertainty resulting in         From deferrals to?
                                       possible significant challenges with      As the home loan deferral period
                                       delinquencies and loan defaults.          ends, customer communication
                                           In this ever-shifting landscape,      strategies should be updated using
                                       real-time data and analytics are          real-time insights to enable tailored
                                       proving their value in helping            and fair outcomes. While many
                                       organisations and customers find a        borrowers have transitioned back
                                       quicker path to recovery. Dynamic,        to normal contractual repayments,
                                       agile risk tools and machine learning     a substantial number are flagging
                                       techniques can be highly effective in     vulnerability still needing payment
                                       delivering a closer profile of customer   deferral programs. As of late
                                       risk and vulnerability for informed       September 2020, 7.4% of total
                                       decision making.                          housing and 10.8% of SME loans
                                           If COVID-19 has taught us             remain on payment deferrals (Source:
                                       anything, it’s the importance of          APRA) at a value of $168 billion.
                                       acting on fact, not on assumptions.           For some customers, this might be
                                       For lending institutions, this means      the first time they have experienced
                                       harnessing external data sets as a        financial insecurity, and they will be
                                       means for making timely, proactive        looking to their lender to understand
                                       decisions. Without the ability to         their needs and provide personalised

                                       “If COVID-19 has taught us anything, it’s the importance
                                       of acting on fact, not on assumptions. For lending
                                       institutions, this means harnessing external data sets
Nick Jenkins                           as a means for making timely, proactive decisions.”
6     CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
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Credit Management

                                        “The residential property market has defied expectation
debt restructuring solutions. Equifax
analysis shows that borrowers aged
between 36 to 45 years are among
the most vulnerable, with the highest
                                        by showing resilience in the face of the pandemic.
number of mortgages in deferral (as     Mortgage demand remained strong in the September
of May 2020). Borrowers from tourist-
dependent Queensland regions and        2020 quarter, and house prices in Australia/capital cities
outer-Melbourne estates are also
grappling with a higher proportion of
                                        experienced a 0.4% rise in October.”
deferrals compared to the national
average.
    Quite commonly in a period of       showing resilience in the face of       people need from their homes, with
crisis we see a direct correlation      the pandemic. Mortgage demand           more people seeking a desirable
between borrowers with low credit       remained strong in the September        environment from which they can live
scores who need longer deferrals        2020 quarter, and house prices in       as well as work.
than those with higher credit scores.   Australia/capital cities experienced
Borrowers in the lower score bands      a 0.4% rise in October (source:         Increased use of digital
had the largest increase in the rate    CoreLogic). While refinancers           channels
of deferral from May 2020. Accounts     initially drove demand, government      Working from home dynamics
exiting deferrals have higher scores    stimulus measures have encouraged       are also changing the way
than those entering or remaining in     an increasing number of first home      customers communicate with
deferrals experiencing lengthened       buyers into the property market.        financial institutions. There is a
credit stress.                               The high-end of the residential    greater need for digital channel
                                        market has grown substantially in       contact, executed in a way that
Property market boom or bust            major Australian cities and across      respects borrower preferences
The residential property market         regional areas. The pandemic has        and suitability. Applying digital
has defied expectation by               changed the perception of what          technology to collections is crucial ➤

                                                              January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA       7
This edition covers: Australian Institute of Credit Management
Credit Management

in efficiently addressing the            data for validation rather than relying   enough to move with their customers.
challenges of rising delinquencies.      on old norms will help identify these     A robust well-thought-out approach
    Delivering on customer experience    variances in borrower behaviour.          to credit risk management and debt
also requires an understanding of                                                  collection is essential.
the mentality of consumers living        A future full of variables                     Resilience to the ongoing
through a crisis. Fear of the unknown    As 2021 unfolds the only constant         disruptions of the COVID-19 crisis
can bring on a scarcity mindset, this    will be change, and the credit            requires pertinent data and advanced
means short-term decision-making         industry may be susceptible to many       analytics to replace assumptions and
overrides and sense of future impact.    different economic variables. The         fill gaps in existing knowledge. The
Helping customers understand and         Government Stimulus has highly            future of credit risk management
manage their financial situations for    influenced outcomes so far for            is knowing your customer, keep
the short-term and long-term, benefits   financial institutions giving a sense     communicating with them and
everyone in the equation. Constant       of security. As we move into a more       knowing where to look to predict
communication with customers can         targeted focus in Fiscal Policy and       customer needs more efficiently and
help borrowers to behave differently     a high dependence on a Covid-19           with greater empathy.
and not make uncharacteristically        vaccine, the underlying vulnerabilities
poor decisions.                          will start to surface with challenges
    With no end date to this             more evident.
pandemic, there is a considerable            There is no silver bullet to deal     *Nick Jenkins
                                                                                   Debt Services Solutions Consultant
way to go before customers return to     with these uncontrollable variables.
                                                                                   Equifax
pre-COVID-19 information processing      Collection teams and risk managers        T: +61 427129852
and decision making. Using factual       need to be flexible, prepared and agile   E: nick.jenkins@equifax.com

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8     CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
This edition covers: Australian Institute of Credit Management
Credit Management

Strengthen your
business systems
now to prepare for the
unknowns of 2021
By Adrian Floate MICM*   The fiscal policy measures                Digital technologies can drive
                         introduced by the State and Federal       change
                         Governments to cushion the                Restricted cash flow due to late
                         economic impacts of the COVID-            payments and a downturn in revenue
                         19 pandemic have provided some            significantly affects a company’s
                         businesses with a much-needed             stability. Payment problems impact
                         lifeline.                                 a business’s finances and cash flow.
                             While many businesses have            This has flow-on effects, including
                         been able to use these measures to        a reduced ability to invest in and
                         keep creditors at bay while operating     grow the company and difficulties
                         smoothly, taking the time now to          accessing finance in the future.
                         strengthen your business systems              While regulators have intervened
                         will reduce risk and ensure your          with measures aimed at addressing
                         organisation is in a strong position to   some of these issues, businesses
                         capitalise on opportunities in the year   need the tools and systems to get
                         ahead.                                    paid on time and unlock capital now.
                             Credit management and finance             In a year like 2020, where
                         professionals should be using             companies have seen the
                         the time between now and when             importance of investing in the right
                         measures such as JobKeeper end to         digital technologies, systems and
                         introduce better systems that will        processes, this should also be the
                         reduce debtors, unlock cash flow to       focus for credit management and
                         strengthen cash reserves and open         finance professionals, particularly
                         opportunities for further growth          those who work in industries that
                         in 2021. Now is not the time to be        have been heavily affected by the
                         complacent.                               pandemic. ➤

                         “While regulators have intervened with measures
                         aimed at addressing some of these issues, businesses
                         need the tools and systems to get paid on time and
Adrian Floate MICM       unlock capital now.”
                                                January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA           9
This edition covers: Australian Institute of Credit Management
Credit Management

The competitive edge may                 in order” before these measures          however, that fixing just one system
be greatest in the retail,               change. Strengthening your business      will not provide a competitive
manufacturing and wholesale              systems should be the first step in      edge. Implementing e-invoicing in
sectors                                  this process.                            an organisation, for example, has a
According to illion’s Late Payments                                               payback period of six to 18 months.
Australia September Quarter              Have a whole-of-business                 This kind of project, while worthwhile,
Analysis, late payments increased 1.6    approach to improving systems            resolves issues in only one part of the
per cent in September and 20.7 per       Company-driven solutions and             business.
cent year-on-year (YoY)1. Some of        a move to better systems will                While targeted innovation may
the biggest increases in late payment    help you to identify and address         improve one area of your business,
times occurred across the retail (13.9   financial problems and risk across       the biggest advantage is available
days), manufacturing (13.1 days) and     your businesses, allowing your           to businesses who use one platform
wholesale sectors (12.6 days)2. These    organisation to be ready to capitalise   across a range of business functions.
payment times haven’t yet filtered       on opportunities in 2021. These
through to an increase in insolvencies   opportunities may include accessing      How can your businesses
and external administration,             capital to grow through acquisition      strengthen its systems?
which is likely due to the Federal       or expanding to new markets, either      Digitising data across your
Government’s changes to insolvency       geographically or with new products      organisation and establishing systems
and bankruptcy laws. It is, however,     and services.                            that “talk” to each other should be
a timely reminder to “get your house         It’s also important to remember,     your core objective as you strengthen
                                                                                  your business’s systems.
                                                                                      Look at digitising and integrating

“Digitising data across your organisation and establishing                        data in all areas of business operation
                                                                                  to drive stronger, data-driven decision

systems that “talk” to each other should be your core                             making. These areas may include
                                                                                  warehousing and logistics, debt
objective as you strengthen your business’s systems.”                             collection, payments, procurement,

10    CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
Credit Management

“Sometimes the idea of new systems is daunting for
                                                                                                             improving your business’s systems,
                                                                                                             consider introducing the infrastructure

professionals across a business, particularly if you’ll                                                      to establish an intent to pay
                                                                                                             framework between your business and
be interacting with the platform every day, and it                                                           its suppliers, and your customers. This

significantly changes your workflow.”                                                                        framework will reduce your trading
                                                                                                             days and improve cash flow, which
                                                                                                             ultimately improves the business’s
                                                                                                             ability to manage risk proactively.
eCommerce and your point-of-sale                allow your organisation to become                                An intent to pay framework
system. The goal here is to eliminate           more proactive.                                              allows customers to set a scheduled
siloed systems that are open to the                 This may include the ability to use                      payment plan with their suppliers
risk of human error and the burden of           your data in negotiating more credit                         to settle overdue debt. Workflow
manual data entry.                              and new funding facilities when it’s                         payments are introduced early in
                                                needed.                                                      the payments process, allowing a
Use one platform across the                         On the other hand, you may use                           business to get paid for products
business                                        the data internally to make a case                           and services at the point the job is
By using one platform amongst                   for why the business can’t take on                           complete, or a delivery made, using
various functions in your organisation,         any further debt. Your data will tell                        verified customer payment details.
you’ll have access to the real-time             the story, and it provides you with                          With this infrastructure, friction is
data you need to unlock capital                 an opportunity to be more strategic                          removed from the payment process
and improve cash flow. This data                every day.                                                   and certainty is created in debt
allows you to identify the business’s                                                                        recovery for the seller.
strengths and areas that may be                 Drive a culture of implementing
underperforming and increasing risk.            intent to pay frameworks and                                 Consider the long-term cost
    In underperforming areas, the               instant payments                                             of inefficient systems and
data may reveal particular customers,           If your organisation doesn’t invoice                         processes
products and industries that expose             until after goods and services are                           Sometimes the idea of new systems
the business to unnecessary risk.               delivered, you are leaving the business                      is daunting for professionals across
Over time, more robust data will                open to further risk. As part of                             a business, particularly if you’ll be ➤

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                                                                                January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA                    11
Credit Management

interacting with the platform every       Go digital and unlock cash flow           adapted quickly this year, showing
day, and it significantly changes your    While regulatory measures in recent       they’re well-equipped to continue
workflow.                                 years have brought much-needed            driving productivity and growth.
    What this year has shown like         awareness to business finance and         Using technology to strengthen
no other, however, is that the risk of    payment problems across Australia,        your systems and unlock capital will
not strengthening your business’s         these measures, understandably, can’t     be no different. It’s the competitive
systems, especially its payment           address the common cause of the           edge businesses will need to
processes and data integration, grows     issue – outdated business systems and     capitalise on the opportunities that
the longer you leave it. Real-time data   processes.                                will arise from the unknowns in the
and business intelligence will give all       To proactively manage risk, your      year ahead.
areas of your business a competitive      business needs one platform with
edge.                                     application across the business to
    Not only do better data and           get paid faster, make the payment         *Adrian Floate MICM
                                                                                    Managing Director, Cirralto
systems make everyone’s lives easier      process seamless for customers,
                                                                                    E: Adrian.Floate@Cirralto.com.au
especially when it comes to financial     integrate data for better reporting and   T: 0412 377 877
reporting and funding, but in today’s     decision making, and unlock capital to    Adrian Floate is the CEO of Cirralto and the
                                                                                    Managing Director of Spenda, a product of
data-driven world, your decisions are     reduce your credit risk and increase      Cirralto
only as good as the data you have         borrowing capacity.
available.                                    Many Australian businesses have       FOOTNOTES:
                                                                                    1   illion, Late Payments Australia September
                                                                                        Quarter Analysis 2020.
“What this year has shown like no other, however, is that                               URL: https://www.illion.com.au/wp-
                                                                                        content/uploads/2020/11/ION_Late_

the risk of not strengthening your business’s systems,                              2
                                                                                        Payments_Sept_Quarter_AU.pdf
                                                                                        illion, Late Payments Australia September
especially its payment processes and data integration,                                  Quarter Analysis 2020.

grows the longer you leave it.”

12     CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
Credit Management

Top of mind for
SMEs in 2021:
paying down debt
and finding new ways
to fund business
Small businesses have signalled they’ll be looking for different ways to fund their
businesses in 2021. This, and other insights that should be on the radar of credit
managers, from the latest ScotPac SME Growth Index.

By Jon Sutton*              Small businesses have named paying       they may sell or close if conditions
                            down debt as their top priority for      don’t significantly improve.
                            2021 and have flagged building on            Since 2014, ScotPac has engaged
                            their 2020 efforts to find new ways      East & Partners to undertake SME
                            to fund their businesses.                Growth Index research twice a year,
                                These are two key findings in the    interviewing more than 1200 small
                            latest ScotPac SME Growth Index.         businesses in the $1-20m turnover
                            It has been a very challenging year      range (a representative sample of
                            for the small business sector: efforts   metropolitan and regional businesses
                            to prevent the spread of COVID-          across all mainland states and major
                            19 created hard internal borders,        industries).
                            temporarily devastated certain               Given many of the federal stimulus
                            industries and led to a government       measures which helped prop up the
                            stimulus package of unprecedented        national economy were designed
                            size and scope.                          around businesses taking on more
                                Conditions were so challenging       debt, it’s worth looking at the SME
                            that at the time of the research         debt landscape.
                            (September and October 2020) one             The November 2020 Index
                            in three small businesses indicated      records rising angst amongst small ➤

                            “Given many of the federal stimulus measures which
                            helped prop up the national economy were designed
                            around businesses taking on more debt, it’s worth
Jon Sutton                  looking at the SME debt landscape.”
                                                  January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA       13
Credit Management

“We’d urge                                                                       Closing, selling, looking beyond
businesses not to                                                                 Job Keeper – impact on SMEs

wait until 2021 to                                                                                                                    SMEs looking for new
make sure they                  SMEs looking
                                                                                                                                      funding options

have the right                  to close or sell
                                                                                                                                      2/3
funding in place.               1/3                                                                                                   planning to adjust business
                                                                                                                                      funding method to deal with
                                                                                                                                      pandemic aftermath

The businesses
                                SMEs plan to sell or close
                                their business if no
                                significant improvement

who will be best                                                                                                              ER
                                                                                                                           NG D
                                                                                                                         DA EA
                                                                                                                          AH

placed to take
                                                                                       CL
                                                                                         O
                                                                                        DOSIN
                                                                                           W G
                                                                                            N

                                                                                                            C

advantage of the
                                                                                                 TO          LO
                                                                                                      LE
                                                                                                        T       S
                                                                                                                  E
                                                                                                                    D

                                  Smaller SMEs hit hardest
recovery are those                SMEs in $1-5m turnover range are almost
                                  double as likely to look to close or sell within 6

that are planning                 months than those in $5-20m range

now.”
                                                                                                                                              Source: scotpac.com.au

business owners about debt levels.               businesses who will be best placed to                                  without significant improvement
SMEs told us the factors they were               take advantage of the recovery are                                     equates to approximately 88,000
most positive about for 2021 were                those that are planning now. The clear                                 businesses around Australia in the
getting “back in the black” and its              message is: don’t get caught short as                                  $1-20m annual revenue bracket, with
corresponding factor of reducing debt            the protection of government stimulus                                  about 50,000 of these businesses
levels. The top challenges SMEs said             tapers off, take the time now to make                                  looking to sell and more than 37,000
they must overcome in 2021 were                  sure you have the right finance in                                     looking to close.
servicing excessive debt levels and              place.                                                                     The smaller the business, the more
diversifying their funding base/finding                                                                                 severe the impact of the pandemic on
new sources of funding, along with               Impact of the pandemic                                                 their long-term strategic objectives
avoiding insolvency.                             Only half (54%) of all the small                                       and solvency. Two out of every five
    Historic Index data shows a very             businesses polled say they are not                                     smaller sized SMEs ($1-5m turnover)
large proportion of small businesses             looking to sell or close due to the                                    are looking to sell or close by April
use easy access debt (such as                    impact of the pandemic, with a                                         2021 unless conditions markedly
personal credit cards or their own               further one in three SMEs considering                                  improve.
funds) to access working capital for             those options if conditions don’t                                          This is also the situation for almost
their enterprises.                               significantly improve.                                                 one in four larger SMEs ($5-20m
    Credit managers would be aware                   This serves as a point-in-time                                     turnover).
the post-pandemic period offers                  indicator, given the research was                                          Retail has been hardest hit,
an opportunity for SMEs to make                  undertaken when Victoria was still                                     with only 9% of retailers definitely
tough decisions within their business.           in lockdown. However it provides                                       not making plans to close or sell.
This includes finding better funding             a stark indication of the precarious                                   For manufacturing SMEs, without
options, to unlock capital and ease the          situation for the small business                                       significant improvement 17% would
cashflow issues that can be crippling            sector if there was another major                                      be looking to close; for transport 3%.
even in good times let alone during a            state lockdown or significant border                                   Nine out of 10 mining SMEs indicated
recession.                                       closures.                                                              they would continue in their business
    We’d urge businesses not to                      East & Partners extrapolates from                                  even if conditions did not significantly
wait until 2021 to make sure they                the data that the one in three SMEs                                    improve.
have the right funding in place. The             looking to sell or close their business                                    For Queensland SMEs, 8% were

14    CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
Credit Management

                                                        Forecasting growth: Optimism varies by industry

                                                                                              Mining the
                                     Transport sector                                         most resilient
                                     staying positive
                                                                                             88%
                                    60%                                                       forecast positive
                                                                                              growth
                                     expecting growth

“The critical
message for                          Retailers expect
small businesses,                    revenue decline                                                     Manufacture and
                                                                                                         Wholesale SMEs
their advisors                      39%                                                                  are optimistic

and for others
                                     expect revenue decline
                                     compared to 33.5%
                                     expecting growth                                                   37%
with influence on                                                                                        expecting growth

the sector is: get
ready.”                                                                                                             Source: Scotpac.com.au

saying they could close; in WA 6%             business owners were looking for         the projected Federal Government
were eying closure. Victoria was the          new answers to perennial funding         stimulus initiatives end.
only state where more than half of            problems, with one in 12 adding              Other funding adjustments include
its SMEs (54%) were looking to sell           non-bank funding facilities to deal      decreasing their borrowings for 2021
or close – 29.5% listed closing, with         with the impact of supply chain          (24% plan to pull back, ahead of 18%
24% looking to sell, making Victoria          and revenue issues created by the        looking to increase their business
also the only state with a higher sell        shutdown.                                borrowing).
than close percentage. NSW small                  We asked SMEs what funding               SMEs with a clear strategy
businesses are much more confident            adjustments they’d make in               and appropriate funding will put
– only 9% flagged closing.                    response to stimulus measures            themselves in the strongest position
                                              ending by April 2021, and their          to face 2021 – so it is not ideal that
SME borrowing sentiment                       responses point to a significant         40% of smaller businesses (under $5m
More than half the SME sector                 shakeup within Australia’s small         annual turnover) have no set idea how
(56%) experienced no significant              business funding sector.                 to fund their business in the short
change in borrowing demand during                 Nearly two thirds are planning       term.
the COVID crisis. This figure was             to reassess the way they fund their          The critical message for small
split evenly between those who said           business, with almost a quarter          businesses, their advisors and
they relied on government stimulus            saying they will reassess their actual   for others with influence on the
and those who didn’t require the              funding provider. This was more          sector is: get ready. Plan ahead to
stimulus.                                     marked in the $5-20m SME category        give yourselves the best chance
    One in five SMEs reported their           (32% looking to reassess provider)       of success and to ensure that your
funding needs increased in the                compared to the smaller $1-5m            business is not at the whim of the
short-term, with a further one in 16          revenue SMEs (15%).                      markets.
preparing for an indefinite increase in           Many are more open than ever             With JobKeeper ending in late
credit demand.                                about using multiple funders,            March 2021, and enforcement of ATO
    Only one in 10 SMEs had                   increasingly non-bank lenders. One       debt on the horizon, SMEs must have
decreased borrowing demand as a               in eight SMEs say they plan to add       funding in place to unlock working
direct result of the pandemic.                non-bank funding facilities to cope      capital and ensure continuity of
    In the midst of the COVID crisis          with their cash flow needs once all      business (download ASBFEO and ➤

                                                                     January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA                         15
Credit Management

ScotPac’s Business Funding Guide for      Top funding frustrations                             government guaranteed loans
a detailed overview of the main small     More than nine in 10 SMEs reported                   during COVID-19. Nearly a quarter
business funding options).                funding frustrations, with perennial                 were frustrated that online lenders
                                          SME funding pain points remaining                    were charging high rates.
Small business funding trends             a bigger concern than COVID-                             The SME frustrations that
SME Growth Index results show SMEs        specific frustrations. The top three                 recorded the biggest proportional
are actively diversifying their funding   frustrations were loan conditions                    increase this year was that funders
base to navigate the aftermath of         (84%), having to provide property                    were hard to deal with and not
COVID-19.                                 security (80%) and lack of flexibility               meeting all the needs of their
    Small businesses are now almost       (74%).                                               borrowers.
twice as likely to fund their new              In 2021 the uncertainty                             SMEs with non-bank borrowing
investment using a non-bank rather        surrounding housing prices could                     rather than bank finance reported
than their main bank. Intention to        mean many businesses owners                          far fewer frustrations than their
fund new growth using a non-bank          will no longer be able to use their                  bank borrowing peers about loan
reached an all-time high of 27%,          family home to fund their business.                  conditions, flexibility and funders
and main bank funding of new SME          It is important that business owners                 being hard to deal with.
investment is now at its lowest (17%),    are aware of funding options that
down from 23% in H2 2018 and from         can provide them with the working                    Good results for SMEs who
the high of 38% in the first round of     capital they need by using the assets                turned to advisors
the Index in 2014.                        already in their business (for example,              With the Australian economy battling
    Just over half the SMEs polled        their outstanding invoices) so they                  out of recession, as Victoria reopens
are looking to fund growth over the       don’t need to rely on the family                     and SMEs plan ahead for life beyond
next six months (650 out of the 1252      home.                                                JobKeeper and other government
businesses). The popularity of non-            Of the COVID-specific response                  stimulus offerings, the message to
bank funding amongst these growth         options, two thirds of SMEs were                     small business owners and those who
businesses has doubled since 2018         frustrated by the lack of a clear                    work with them is: don’t panic, look
(then, 12% planned to fund growth         recovery path out of the pandemic-                   for what you can do to improve your
using non-banks, now this figure is       induced recession. Almost half                       business.
23%).                                     encountered difficulty accessing                         Advisors play a key role in

                                Most states expect positive
                                                                                                         “SMEs with non-
                                 growth in next 6 months
                                                                                                         bank borrowing
                                                                                                         rather than bank
                                                                                                         finance reported far
                                                                                                         fewer frustrations
                                                                                                         than their bank
                                                                                                         borrowing
                                                                                                         peers about
                                                                                                         loan conditions,
                                                                                                         flexibility and
                                                                                                         funders being hard
                                                                                                         to deal with.”
                                                                          Source: scotpac.com.au

16     CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
Credit Management

                                          SMEs reliance on trusted
                                                                                                                                        “Advisors play
                                           advisors grows in 2020                                                                       a key role in
                                                                                                                                        improving SMEs –
  53%                                                                                          63%                                      just over half the
                                                                                                                                        businesses polled
  of SMEs relied more
  on their key advisor                                                                          of SMEs leaned on their key
  during the pandemic                                                                           advisor for cutting costs

  82%
  said this had a positive
                                                                                                                                        relied more on
  impact on their business
                                                                    RREE
                                                                        SSEE
                                                                            RRVV
                                                                                                                                        their key advisor,
                                                                                                                                        for example their
                                                                                EEBB
                                                                                    AANN
                                                                                        KK

                                                                                                                                        accountant or
                                                                                                                                        broker, since the
         37%                                                                                                                            pandemic began.”
          of SMEs sought advice on
          accessing government stimulus

                                                                                                              Source: scotpac.com.au

improving SMEs – just over half the              Rebounding in 2021                                                     response, by a significant margin.
businesses polled relied more on                 Despite the massive impact of the                                      The other key items on the small
their key advisor, for example their             pandemic, SME revenue growth                                           business wish list were legislated
accountant or broker, since the                  forecasts through to April 2021 did                                    30-day payment terms and
pandemic began.                                  not dramatically decrease, although                                    insolvency reform.
    They approached their advisors               this round of research did record a
three times more frequently than                 lowest ever all-respondent positive                                    *Jon Sutton
average, and of those SMEs who                   growth average of +0.1%.                                               Chief Executive Officer
                                                                                                                        E: suttonj@scotpac.com.au
sought advice from trusted advisors,                 Australia is dealing with its first                                T: 1300 209 417
eight in 10 reported that this external          recession in 30 years, and against
business advice had a positive                   this backdrop a record low 47%
impact.                                          of small businesses are expecting
    The top five positive impacts small          revenue growth, and around a
businesses said their advisors had               quarter are forecasting a revenue
were:                                            drop through to April 2021.
— Reducing costs (63%), to help                      In a positive, despite a
    improve their bottom line                    significantly challenging six months
— Helping SMEs access government                 for the small business sector the
    support and stimulus measures                number of SMEs forecasting a
    (37%)                                        revenue decline moved only one                                         ScotPac is Australia and New Zealand’s largest
                                                                                                                        non-bank SME lender, and for more than 30 years
— Providing confidence about the                 percentage point, to 23.8%, since                                      has helped thousands of business owners with the
    direction the business was taking            March 2020.                                                            working capital they need to succeed. ScotPac
                                                                                                                        prepared this article from excerpts of their twice a
    (28%)                                            When asked to name the top                                         year SME Growth Index research. To download the
— Improving customer relationships               three factors needed for them                                          latest Index or request previous Index research please
                                                                                                                        visit www.scottishpacific.com/news/research.
    (19%)                                        to rebound from the recession,                                         For more information contact:
                                                                                                                        Kathryn Britt, Director, Cicero Communications
— Helping them access funding                    Australian small business owners
                                                                                                                        kathryn@cicero.net.au
    (18%)                                        named open borders as the top                                          0414 661 616

                                                                                             January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA                               17
Credit Management

ATO’s disclosure of
business tax debts
to credit reporting
bureaus
By Patrick Coghlan MICM*               Businesses with significant tax debts will have their
                                       information reported to credit reporting bureaus;
                                       credit scores will be impacted.

                                       1. Tax debt information                   information under the Confidentiality
                                       disclosure                                of Taxpayer Information provisions.
                                                                                 This means that credit reports
                                       What is the Taxation Administration       currently do not factor in existing tax
                                       (Tax Debt Information Disclosure)         debt and provide a limited overview
                                       Declaration?                              of an entity’s creditworthiness.  
                                        In the future, businesses with               With this legislation, there
                                       significant overdue tax debt will have    will finally be transparency over
                                       their information become public.          businesses that have excessive tax
                                       When the Taxation Administration          debt and have not engaged with
                                       (Tax Debt Information Disclosure)         the ATO to manage their debts.
                                       Declaration 2019 comes into effect        The default would be visible on a
                                       the ATO will be releasing their tax       commercial credit report and could
                                       debt information to registered credit     negatively affect an entity’s credit
                                       reporting bureaus (CRBs), including       score.
                                       CreditorWatch.
                                            In the 2016-2017 Mid-Year            2. Transparency of tax debt
                                       Economic and Fiscal Outlook, the          information
                                       government announced its intention
                                       to allow the ATO to report tax debt       Problems with the lack of
                                       information of certain entities to        transparency
                                       CRBs. On 19 December 2019, the            The lack of transparency about
                                       declaration was made official and the     significant tax debts is detrimental to:
                                       legislation will come into effect later   – Creditors
                                       this year.                                – Employees
                                            Currently, the ATO is not            – Wider community and industry
Patrick Coghlan MICM                   authorised to report any tax debt         – Government & economy

18    CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
Credit Management

“When an entity is wound up due to its overwhelming
                                                                                     billion. When an entity fails to pay
                                                                                     their employees, this responsibility

tax debts, its employees often don’t receive their                                   falls onto the government (via the
                                                                                     Fair Entitlement Guarantee or FEG),
entitlements and/or end up losing their jobs suddenly.                               which in turn affects all taxpayers.
                                                                                     The government and economy suffer
While this can result in emotional and financial hardship,                           when tax debts are unpaid.  

it could also have been avoided...”                                                  Benefits of tax debt information
                                                                                     disclosure
                                                                                     Having more visibility over overdue
Creditors                                   Employees                                tax debts will help address these
When suppliers are unaware that an          When an entity is wound up due           issues.
entity has significant tax debts, they      to its overwhelming tax debts, its
enter into a situation without getting      employees often don’t receive their      Creditors
a full picture of that entity’s financial   entitlements and/or end up losing        Businesses, financial institutions and
position. It can be detrimental for         their jobs suddenly. While this can      credit providers will be able to make
them to make decisions about                result in emotional and financial        more informed decisions about the
providing credit while being oblivious      hardship, it could also have been        entities they engage with and make
to an entity’s staggering debts.            avoided if there had been more           more accurate assessments about
    Currently, a creditor often only        warning signs or transparency            their creditworthiness. This legislation
realises that their debtor has an           regarding the tax debt.                  will empower creditors to take more
overdue tax debt when the ATO                                                        preventative measures instead of
takes legal action to recover it and        Government & economy                     recovery actions and will help to
ultimately winds up the debtor. This        As of the 2018-2019 financial year,      reduce the risk of the domino effect.
could result in a domino effect, where      small businesses owe the ATO about
the creditor faces cash flow problems       $16.5 billion in debt. Tax evasion       Debtors
themselves as their debtor is forced to     through illegal phoenix activity is      The risk of being exposed places
shut down leaving the creditor out of       estimated to have an annual direct       extra pressure on entities with
pocket.                                     impact between $2.85 billion and $5.13   excessive tax debt. They will have ➤

                                                                  January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA          19
Credit Management

to take appropriate actions to avoid      3. Releasing tax debt                         which at least $100,000 is overdue
being reported by the ATO. This           information*                                  by more than 90 days
will hopefully encourage entities                                                   -   It is not effectively engaging
to engage with the ATO earlier to         Who will receive this information?            with the ATO to manage its tax
manage their tax debts. (More on          In order to receive tax debt                  debt
effective engagement in Section 4.)       information, the CRB must:                -   The Inspector-General of Taxation
                                          - Be registered with the ATO                  (IGT) is not considering an
Industry                                  - Enter into an agreement with the            ongoing complaint about the
This legislation will create a fairer         ATO about reporting terms                 proposed reporting of the entity’s
playing field between entities that do                                                  tax debt information
not comply with their tax obligations     Which entities will be reported?
and those that do. Companies that         The ATO can only disclose this            What information will be reported?
ignore their tax obligations operate      information when the following            If the entity meets the above criteria,
from a lower cost base and can            criteria are met:                         the ATO will report to CRBs the
therefore undercut competitors. Once      - It has an ABN and is not an             following information:
reported, these companies will face           excluded entity (i.e. deductible      - Unique identifiers like their ABN
sanctions beyond the ATO – loss of            gift recipient, registered charity,        and legal name
investors and suppliers, significantly        government entity, or complying       - Balance of overdue tax debts at
reduced credit score, and more.               superannuation entity)                     the time of initial reporting
                                          - It has one or more tax debts, of        - Regular updates on the balance
Economy & Government
There will be greater transparency in
the supply chain, making it harder for
illegal phoenix activity or tax evasion   “Ultimately more tax revenue will be returned
to occur. Ultimately more tax revenue
will be returned to the government and
                                          to the government and less public money paid out
less public money paid out via FEG.       via FEG.”

20    CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
Credit Management

“If you have an active review with the Administrative                                      Did you know?
Appeals Tribunal (AAT) or appeals to the Courts, you will                                  In 2018 – 2019…

not be reported by the ATO.”                                                               z The ATO received 19,826
                                                                                             complaints (inclusive of
                                                                                             IGTO complaints)
                                                                                           z The ATO resolved more
    of the overdue tax debt until               managed sustainability and                   than 26,000 objections (up
    the entity no longer meets the              address ways to mitigate risks.              from 24,350 objections the
    reporting criteria                          You must be compliant with this              year before)
-   Notification when the entity no             plan, otherwise you could still be         z There were 441
    longer meets the reporting criteria         eligible for reporting.                      applications for review or
                                                                                             appeal to the AAT or other
When will this information be              To stop a report from going through,              courts
reported?                                  consider one of the following:                  https://www.abc.net.au/news/2019-
The ATO will give the entity a 21-day      - Raise an objection and request a              10-24/ato-debt-book-grows-to-
                                                                                           2445b-in-australia/11633312
notice period before releasing their          review or appeal
tax debt information. At the end of           * Dispute your taxation
the 21 days, if no action has been              assessment, determination,
taken by the entity, the ATO will               notice or decision by lodging a            CreditorWatch has been working
attempt a final phone call to help the          Part IVC objection.                    with the ATO since 2014 to plan
entity address their debt. If this is         * Then, if you are still dissatisfied    and design this legislation. We are
futile, their information will then be          with the objection outcome,            proud to see it come into effect and
officially released to registered CRBs.         request a review of that decision.     are confident in its ability to assist
                                           - If you have an active review              companies to better assess credit risk
4. How to prevent your business               with the Administrative Appeals          and reduce bad debt. If you have any
from being reported – effective               Tribunal (AAT) or appeals to the         questions about how this legislation
engagement with the ATO*                      Courts, you will not be reported by      will affect your business, get in touch
If your business is facing a significant      the ATO.                                 with us today on 1300 50 13 12 or
tax debt, as long as you effectively       - Lodge a complaint with the                at https://creditorwatch.com.au/
engage with the ATO, they won’t be            Inspector General of Taxation            contact/.
allowed to disclose your tax debt             (IGT) about your tax debt and the
                                                                                       *The ATO is currently in the design phase so
information. To do this, you may either       fairness of the ATO’s approach in
                                                                                       the above information is subject to change.
enter into a payment plan or dispute          their dealings with you.                 CreditorWatch will continue to provide
your tax debt.                             - Contact the ATO to claim                  updates as it progresses.

                                              and demonstrate exceptional
To avoid or manage existing debt:             circumstances
- Enter a payment plan                        * The ATO considers exceptional
   * The ATO will work with you                 circumstances impacting your
     to create a custom payment                 ability to pay your debts and you
     plan tailored to your individual           may be able to claim temporary
     circumstances, including your              reprieve. This includes family         *Patrick Coghlan MICM
                                                                                       CEO
     capacity to pay the proposed               tragedy, serious illness, natural
                                                                                       CreditorWatch
     amounts. Together, you will                disaster impacts and other             T: 1300 50 13 12
     agree on a plan which can be               circumstances.                         www.creditorwatch.com.au

“The ATO will work with you to create a custom payment plan tailored to your individual
circumstances, including your capacity to pay the proposed amounts. Together, you will
agree on a plan which can be managed sustainability and address ways to mitigate risks.
You must be compliant with this plan, otherwise you could still be eligible for reporting.”
                                                                  January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA                 21
Consumer Credit

ACCC misses
opportunity to
fine-tune open
banking rules
                                       The Australian Competition                  consumer’s consent to third
By Richard Atkinson*
                                       and Consumer Commission has                 parties, including to their trusted
                                       recently published its third set of         professional advisors (such as
                                       amendments of the Consumer Data             accountants, tax agents and
                                       Right (CDR) Rules which are required        lawyers), and any third party on a
                                       to underpin Australia’s emerging            limited ‘insights’ basis.
                                       open banking system.                      z Increase consumer benefit:
                                           The amendments follow the               allowing business and corporate
                                       release of a Consultation Paper by          consumers to access their CDR
                                       the ACCC in October 2020, where             data, and adding flexibility
                                       feedback was requested on the               and functionality to improve
                                       following proposed Rules changes:           consumer experience in relation
                                       z Introduce new accreditation               to the management of consumer
                                           levels: creating new pathways           consents to collect and use CDR
                                           for service providers to become         data, joint bank accounts and
                                           accredited data recipients.             accounts that have additional card
                                           Proposals for new levels (‘tiers’)      holders.
                                           of accreditation are intended to
                                           lower barriers to entry and reduce    The latest Rules amendments have
                                           compliance costs for service          addressed the Increase consumer
                                           providers that do not require         benefit component, and illion is
                                           unrestricted access to CDR data.      strongly supportive of these changes.
                                           They also recognise that supply       illion is concerned, however, that the
                                           chains for data services regularly    amendments do not address the
                                           involve multiple service providers,   Introduction of new accreditation
                                           and that CDR participants can         levels or the Provision of greater
                                           appropriately manage risk and         choices for customers about who
                                           liability through commercial          they share their data with.
                                           arrangements.                              illion has made several
                                       z Provide greater choices for             submissions to the ACCC’s CDR
                                           consumers about who they              Rules drafting process, and has long
                                           share their data with: permitting     advocated for a system that makes
                                           accredited data recipients            it easy for individuals to securely
Richard Atkinson                           to disclose CDR data with a           share their data while providing

22    CREDIT MANAGEMENT IN AUSTRALIA  •  January 2021
Consumer Credit

“The goal of the CDR is to give customers a right to direct                             responsibility for the drafting of future
                                                                                        Rules amendments passing from

that their data be shared with others they trust, so that                               the ACCC directly to the Treasury in
                                                                                        February 2021.
they can benefit from its value.”                                                           Where it all leads now is the big
                                                                                        unknown. The ACCC has addressed
                                                                                        the easy question, but what about the
mechanisms for businesses to               accreditation of organisations to            other, more difficult questions?
securely access CDR data, at the           receive CDR data.                                We know from the introduction
same time minimising barriers to                Based on the fact that we don’t         of the UK’s open banking model that
entry.                                     have a view on what the next stage           regulation was a big problem. The
     We note that the latest amendments    looks like, it’s likely that other players   UK’s open banking system has been
fail to meet the Government’s own          in the market will not be able to            operational for two years now but the
recommendations for tiered access          participate until at least 2022.             legislation and Rules haven’t provided
to data; Recommendation 4.8 in the              In illion’s experience, the current     a good foundation for it to be really
Government Inquiry into the Future         model imposes a significant cost             successful.
Directions for the Consumer Data           on an organisation to achieve                    Let’s make sure we learn from their
Right.                                     accreditation. There is a clear and          issues and get it right in Australia –
     The goal of the CDR is to give        present danger that the benefit              aligned to the original goals of the
customers a right to direct that their     of CDR will not be realised as the           Consumer Data Right and the Future
data be shared with others they trust,     barrier to access the data (in the           Direction that the Government has
so that they can benefit from its value.   form of accreditation) is too high,          articulated.
To achieve this outcome, the Rules         evidenced by the fact that there are             To access illion’s full summary of
framework must balance security            only six data recipients accredited          the latest amendments, click here.
and cost of accreditation against          after six months – two of which are
facilitated data sharing.                  illion.
     We are six months away from all            At this stage it is now not clear       *Richard Atkinson
ADIs having to expose transactional        whether further amendments are               General Manager Consumer Risk and AML
                                                                                        illion
data to the CDR, however the current       planned to address these two critical        M: +61 477 444 414
rules still have a single model for        areas. This is further complicated by        E: Richard.Atkinson@illion.com.au

                                                                    January 2021  •  CREDIT MANAGEMENT IN AUSTRALIA             23
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