An independent review of the Privacy (Credit Reporting) Code 2014 should include the significance of comprehensive credit reporting to lenders’ mortgage insurance (LMI), according to the Insurance Council of Australia.

The review by PricewaterhouseCoopers should also examine the level of participation in comprehensive credit reporting, which operates under a voluntary scheme, it says.

“In support of sound lending practices, LMI providers rely on access to [comprehensive credit reporting] information to appropriately identify, measure and price risk in providing mortgage insurance coverage,” the Insurance Council says in a submission to the Office of the Australian Information Commissioner.

“This is why direct access to all available credit information on a borrower is integral to the business model of all LMI providers under Australia’s prudential regulatory regime.”

A Productivity Commission inquiry into data availability and use suggested draft legislation to mandate comprehensive credit reporting if participation in the scheme remains below a critical mass of 40% by the middle of this year.

Treasurer Scott Morrison has indicated the Government will impose a mandatory reporting regime if credit providers are not reporting at least 40% of their data by the end of the year.