Timothy Pilgrim

Ahead of the impending overhaul of Australia’s credit reporting system, the Australian Retail Credit Association (ARCA) yesterday launched a new straight-talking website CreditSmart.org.au.

The site provides a range of tools and tips to help educate consumers about the basics of credit reports and how they can proactively manage their credit history.

In March 2014, reforms to Australia’s Privacy Act will see extensive changes in the credit reporting system including the introduction of the Credit Reporting Privacy Code, which was drafted by ARCA at the invitation of the Privacy Commissioner, Mr Timothy Pilgrim.  The reforms will:

• Provide a clearer picture of a consumer’s ability to repay debts, which may enable providers to make more accurate and better informed lending decisions
• Enable better matching of consumer credit needs, which may reduce the risk that consumers commit to repay more credit than they can afford
• Give fairer access to credit and increased consumer protection

The launch of CreditSmart.org.au is the first step in ARCA’s consumer education campaign, aimed at helping all Australians take more control over their credit reports by providing unbiased and fair information.

“It is important consumers are aware of these changes as they will affect what is in their credit report and what information can be accessed by credit providers. Together with many of Australia’s largest financial institutions and credit reporting bodies, we’ve built CreditSmart.org.au to help improve consumer understanding of these changes,” ARCA CEO Damian Paull said.

Aussie spending habits are a good reason to get CreditSmart

Australians currently have about $34 billion in credit card debt, and research suggests that around 13 per cent of people pay only the minimum repayment off their account each month.  Considering Australians spent around $24 billion on credit cards in the lead up to Christmas, it seems we are still using credit to finance our everyday purchases – although our balances are falling.

Credit reports are routinely requested by organisations when consumers apply for loans, mortgages, credit cards or even a mobile phone plan. Credit reports historically only featured negative information about an individual’s credit history, such as defaults, but this will start to change from March 2014 when some credit providers who choose to participate in comprehensive credit reporting will also be able to share and access additional information such as repayment history behaviour.

According to independent research commissioned by ARCA, 59 per cent of consumers have not heard of credit reporting.  Those who had heard of it predominantly associated it around ‘negative’ aspects of their credit worthiness.

“While the launch of CreditSmart is an important step towards improving consumer understanding of these changes, the fact is most consumers don’t understand what their credit report is for and how they can use it to their advantage when using credit in a sensible way. We want to empower Australian consumers to take control of their credit report to assist them to better manage their financial position,” Mr Paull concluded.

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John McMillan

The Australian Retail Credit Association (ARCA) today welcomed the registration of the Credit Reporting Privacy Code (CR Code) by the Office of the Australian Information Commissioner (OAIC).

The registration of the CR Code by the national credit reporting regulator is the final piece of the legislative jigsaw before Australia’s new credit reporting regime comes into effect in March.

The final registration of the CR Code marks a significant milestone for ARCA, which was appointed by OAIC in December 2012 to draft the CR Code.

In registering the CR Code, Australian Information Commissioner John McMillan noted the considerable contribution made by ARCA to ensuring that the Code was ready in time for the commencement of the new regime on 12 March this year, working with a diverse range of stakeholders including the OAIC.

“ARCA Members invested significant time and resources throughout the code development process to provide the regulator with a code that protected the interests of consumers while balancing the needs of industry,” ARCA CEO Damian Paull said.

Credit reports of individuals are routinely requested by organisations when individuals apply for loans, mortgages, credit cards or even a mobile phone plan. Credit reports currently only feature negative information on individuals, such as defaults.

From March this year, consumers will have access to important new consumer rights in the credit reporting system that will help them take better control of their credit history, and lenders will gain access to new data that can help them make better lending decisions.

According to independent research commissioned by ARCA, 59 per cent of consumers had not heard of credit reporting and predominantly associated it around ‘negative’ aspects of their credit worthiness.

“These reforms will bring Australia into line with other OECD countries and will help empower consumers by improving awareness and engagement with their credit report – as is common in other countries,” Mr Paull said.

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