Damian Paull

The Australian Retail Credit Association (ARCA) has called on financial intermediaries – mortgage and finance brokers, accountants and financial planners – to use yesterday’s inaugural CreditSmart Privacy Day (7 May) as a catalyst to discussing  recently-introduced changes to the credit reporting system with clients.

On 12 March, reforms to the Privacy Act saw extensive changes to Australia’s credit reporting system , providing a clearer picture of a consumer’s ability to repay debts, enable better matching of consumer credit needs, and give fairer access to credit with increased consumer and privacy protections.

“Mortgage and finance brokers, accountants and financial planners may be the first port of call when a consumer has a problem with their credit report, and an essential link in the chain to inform their clients on the credit reporting system and their consumer rights,” said ARCA CEO Damian Paull.

“It’s vital that we help to educate consumers about what the new laws mean in practice, how credit reports are used, and what protections consumers have so we, as an industry, can help prevent any confusion around the new credit reporting system.  The CreditSmart website is used extensively by advisers to educate themselves and clarify their clients’ new consumer rights, so that they can best advise their clients how to sort out credit report-related issues,” Mr Paull said.

7 May: CreditSmart Privacy Day

Yesterday (7 May) marked Australia’s first CreditSmart Privacy Day– a new awareness day forming part of Privacy Awareness Week (4 – 10 May 2014).

“We’re delighted that CreditSmart is one of the activities during Privacy Awareness Week. It creates the perfect opportunity for financial professionals to introduce credit reporting and the associated privacy protections as part of their important conversations with clients,” ARCA CEO Damian Paull said

Privacy Commissioner Timothy Pilgrim said greater awareness around the new credit reporting system as a result of a day focussed on credit reporting is a positive thing for all Australians.

“The OAIC is releasing a number of fact sheets today to help consumers understand their credit reporting rights. The fact sheets, together with the CreditSmart website developed by ARCA, provide a good mix of formats for consumers to be better informed about credit reporting,” Mr Pilgrim said.

Consumers and financial professionals can find more detailed information on the credit reporting laws; including detailed steps and explanations on what information is included, who can access consumer credit reports, and directions for consumers to access their credit reports at the CreditSmart website.

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Damian Paull

Commonwealth Attorney-General, Senator the Hon George Brandis QC, has today requested the Credit Reporting Privacy Code (CR code) be varied so that the five day grace period for late payments recorded on a consumer’s credit report is extended to 14 days.

As the CR code developer, ARCA will make an application to the Office of the Australian Information Commissioner to vary the CR code, which went live following the start of comprehensive credit reporting in Australia on 12 March.

“Given the concerns raised by the community and reflected by the Attorney General on this matter, we agree that a 14 day grace period is an appropriate compromise before a late payment is recorded as Repayment History Information,” ARCA CEO Damian Paull said.

Comprehensive credit reporting features the inclusion of Repayment History Information which shows payments which were made or missed for each month over a 24 month cycle on a consumer’s credit report.

Understanding the difference between late payments and defaults

Repayment History Information helps improve the accuracy of predicting the credit risk of consumers, which will help lenders meet their responsible lending obligations. Ultimately, comprehensive credit reporting will ensure more consumers get better access to credit.

“It’s important consumers understand the difference between late payments and defaults,” Mr. Paull said.

“One late payment on your credit report is less serious than a default.  Any of us can be on holidays or forgetful, and a late payment can be offset by an overall positive history of paying most accounts on time. Defaults on the other hand are always more serious,” he said.

As of 12 March 2014, defaults can only be recorded on your credit history if the payment is more than 60 days overdue, is for a debt of more than $150, and you have received written notifications prior to the listing of the default.

“It’s also important for consumers to understand that only credit providers with an Australian credit license can report and obtain Repayment History Information – so late telecommunications or utilities bills will not be included on your credit report,” Mr Paull said.

ARCA has developed www.creditsmart.org.au to help consumers navigate the changes to the credit reporting regime and understand their new consumer rights.

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