Credit reporting reforms supported by Senate Committee

7 October 2011. Veda today urged the Federal Government to act swiftly to finalise new credit reporting legislation after a Senate Committee Report supported provisions of a draft exposure bill.

Proposals for credit reporting reform were first recommended in 2008 by the Australian Law Reform Commission (ALRC).

Matthew Strassberg, Senior Advisor of External Relations at Veda, said: "There is a risk the world is on the edge of a second economic downturn. These reforms will protect Australia's economic interests at a time of increasing uncertainty.

"Two years ago the Minister for Privacy, Brendan O'Connor, announced a timetable to ensure the passage of credit reporting reforms by mid-2012.

"We support that timetable. Given the growing uncertainty on financial markets and the possibility of another global recession, this legislation must be given priority.

"The Government made responsible lending a legal obligation, but critical information is still missing from credit reports.

"Current credit reports do not show a person's credit limit, or if they are failing to pay the minimum payment required on a credit card or loan when they are due.

"Better information on credit reports is an important step in preventing people from falling into a debt spiral.

"It also gives those people who have gone through financial difficulties, such as a divorce or loss of employment, a chance to show they have since recovered and are able to meet new credit repayments," said Mr Strassberg.

Australia currently has a negative reporting system, which relies upon a limited amount of information to assess a person's ability to make payments and take on new credit. This data includes defaults over the past five years, bankruptcies and the number of credit applications made.

In contrast, a comprehensive or positive system, will provide better information concerning a person's credit behaviour, including their current credit limits and their ability to meet the minimum payment on a credit card or loan on time.

"This paints a more complete picture of a person's credit history and provides lenders with a more reliable measure to predict whether future payments can be made without causing undue financial strain.

"Our banking and credit reporting industries have already committed extensive resources in preparation for the long-awaited changes," said Mr Strassberg.

"We call on the Government to provide sufficient resources and time in the parliamentary schedule to ensure a final bill is introduced and passed by mid-2012," said Mr Strassberg.