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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Credit reports previously only featured negative information about an individual’s credit history, such as defaults and enquiries, but from today some credit providers who choose to participate in comprehensive credit reporting (CCR) will also be able to share and access additional information such as repayment history information. These reforms will provide 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 protection.

Independent research commissioned by ARCA found the vast majority of consumers recognise the importance of having a good credit report, as either important (67%) or very important (21%). When consumers were informed about the changes, over half (53%) felt the new system will make things better for them, while 42 per cent believed they would be no better or worse off. One in four (25%) consumers feel stressed when it comes to managing credit and their own personal financial situation.

ARCA CEO Damian Paull said the positive response from consumers to the reforms to credit reporting  were encouraging.

“Consumers see the new credit reporting system as more consumer centric – and a second chance for the “not so good payers. Dealing with finances is not always easy so it’s promising Australians are becoming more aware of credit reporting and taking steps to manage their credit footprint and financial future,” said Mr Paull.“

Last month, with the assistance of Australia’s largest financial institutions and credit reporting bodies, ARCA launched their consumer education website www.CreditSmart.org.au to help improve consumer understanding of the credit reporting changes.

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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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