Leading consumer advocacy bodies are concerned that customers who experience financial difficulty repaying loans will be unfairly penalised by credit reporting reforms proposed by the National Consumer Credit Protection Amendment (Mandatory Comprehensive Credit Reporting) Bill 2019.
Together with Financial Rights Legal Centre, Australian Privacy Foundation (APF), CHOICE and Financial Counselling Australia (FCA), Consumer Action has expressed concerns that this Bill will introduce new hardship flags on people’s credit reports that would unfairly disadvantage consumers. This move will discourage borrowers from approaching lenders when they are facing financial difficulty, essentially undermining a decade of successful work in cementing good hardship practices in Australia.
The Bill also recommends a 12-month retention period of information relating to all completed hardship arrangements in the customer’s credit file. Hardship flags should be instead removed immediately after the hardship arrangement has been completed.
Keeping information about previous hardship on a person’s credit report penalises them for an issue they have already successfully resolved. Furthermore, this information will not assist lender to make responsible lending decisions.
The joint submission also comments on:
- Limiting access to financial hardship information to loan decisions,
- The need for public disclosure of information security risks,
- Problems with the definition of ‘financial hardship indicator’,
- The need for a robust independent statutory review, and
- Amendments to external dispute resolution requirements.