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Privacy Act Review leads to potential enhanced Credit Reporting Information

Thursday, October 01, 2009 - Posted by Philip Harvey

A recent Federal Government Response to Australian Privacy Law & Practice Reforms has provided a favourable response to proposed enhanced credit information allowing lenders to more accurately assess the Credit History of loan applicants. 

The approved recommendations should permit credit reporting information to include the following categories of personal information, in addition to those currently permitted in credit information files under the Privacy Act: 
(a) the type of each credit account opened (for example, mortgage, personal loan, credit card); 
(b) the date on which each credit account was opened; 
(c) the current limit of each open credit account; and 
(d) the date on which each credit account was closed.

Further to the additional personal,  the new Privacy (Credit Reporting Information) Regulations should also permit credit reporting information to include an individual’s repayment performance history, comprised of information indicating: 
(a) whether, over the prior two years, the individual was meeting his or her repayment obligations as at each point of the relevant repayment cycle for a credit account; and, if not, 
(b) the number of repayment cycles the individual was in arrears.
Note: there is a recommendation for the deletion of any repayment performance history (whether positive or negative) after 2 years.

There are also a number of exclusions to the repayment performance history including;

  • Not listing amounts less than a prescribed amount
  • Not listing dishounered cheques
  • Not listing people under the age of 18
  • Must have taken reasonable steps to ensure the individual concerned is aware of the intention to report information.

This is a move that could see Australia adopt the United States model where Positive Credit Reporting has been available for many years.

If these recommendations are passed into Law, it may mean increased responsibility on both the Lending Teams & Collections Teams to report information to a CRA (Credit Reporting Agency). Unless a "smart" technological solution can be adopted that would update this Repayment performance History automatically, someone would have to key in all this data at key milestones in order to gain the benefits for the industry and reduce credit risk.

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