A credit reporting accuracy advocate says ‘about time’ for new laws delivering a better credit reporting complaints process.
29 May 2012
A leading credit rating repairer has welcomed amendments to Privacy Laws which will allow consumers easier dispute resolution for credit rating errors, but still worries about new information available to lenders about repayment history.
CEO of MyCRA Credit Rating Repairs and Board Member of Credit Repair Industry Association of Australasia, Graham Doessel says up till now consumers have done it tough trying to address the inconsistencies on their credit files, and the new changes will allow for a more defined process of complaint and recourse for creditors not complying with the law when adding listings to credit files.
“The new laws will definitely benefit consumers when trying to address listings which are placed in error on their credit file. At the moment people are basically blacklisted from credit for between 5 and 7 years if they have bad credit history, and if that history should not be there, the process of complaint has been difficult to say the least,” Mr Doessel explains.
The Privacy Amendment (Enhancing Privacy Protection) Bill 2012, which had its second reading in Parliament last week, is part of the Gillard Government’s ‘modernisation’ of credit reporting, which they say will make the credit reporting regime more flexible and less prescriptive by emphasising industry-led complaint resolution.
Some of the major changes to what information will be available on credit files as part of comprehensive credit reporting include:
- the types of credit accounts and when they were opened and closed;
- the current credit limits of each account; and
- information about repayment history-for example, when a credit card was paid off on time, and including information about overdue payments.
Attorney-General Nicola Roxon says the introduction of new information will be a positive change for consumers.
“These reforms will mean more families can access credit. And it will mean the banks can assess credit risks more accurately,” she said in a speech to Parliament last week.
When the new legislation comes in, late payment notations will be added to credit files by licenced creditors even if a bill is one day late. The notation remains on the individual’s credit file for 2 years.
This extra information will be further used to assess credit risk by lenders. The Government says these reforms will lead to decreased levels of over-indebtedness but will also allow people who have a credit file listing the chance to ‘make up’ their negative listing with consistent positive repayment data.
But Mr Doessel says initially he forsees less people eligible for credit with the introduction of this new information and is concerned it could push some borrowers into the non-conforming market unnecessarily.
“This information is being collected now, despite most people not knowing the implications of late payments. If lenders err on the side of caution with late payment notations, it could force more people into the non-conforming market with higher interest rates if they are refused mainstream credit,” he says.
The saving grace, Mr Doessel says is the greater insistence on credit reporting accuracy which has been brought in with the new laws.
“Creditors can and do make mistakes when placing listings on credit files, and the onus is on the consumer to identify and address inconsistencies. Up till now, the consumer has been forced to address these errors with little legislative support,” he says.
The new laws around complaints correction will:
- Streamline the correction and complaints process for credit reporting; and
- Force the Creditor to justify credit listings and actually substantiate the information it reports on credit files; and
- Allow consumers to complain directly to the appropriate Ombudsman rather than having to go through the organisation’s complaints process first; and
- Provide for remedies such as compensation for consumers who are negatively impacted by a Creditor who has failed to comply with credit reporting law (penalties for breaches of the Privacy Act could be up to $220,000 for an individual and $1.1 million for an organisation).
“Finally there is some real incentive for Creditors to take due care with adding listings to credit files and we as credit repairers ultimately have a better avenue to help our clients remedy their credit rating errors,” Mr Doessel says.
Graham Doessel – Founder and CEO MyCRA Board CRIAA Ph: 07 3124 7133
Lisa Brewster – Media Relations MyCRA Mob: 0450 554 007 firstname.lastname@example.org
MyCRA Credit Rating Repairs is Australia’s leader in credit rating repairs. We permanently remove defaults from credit files.