Reporting of financial hardship information by credit providers to credit reporting bodies as part of a borrower’s consumer credit monthly repayment history information will be required from 1 July 2022.
Disclosure of financial hardship information by credit reporting bodies will be limited to situations where the consumer has applied to a credit provider for a new loan.
Credit reporting information that is or was derived from financial hardship information about an individual must not be disclosed by a credit reporting body:
• to a credit provider for the purpose of collecting payments that are overdue in relation to consumer credit provided by the provider to the individual; or
• to a credit provider for the purpose of collecting payments that are overdue in relation to commercial credit provided by the provider to a person; or
• to a credit provider for the purpose of assessing whether to accept the individual as a guarantor in relation to credit for which an application has been made to the provider by a person other than the individual; or
• to a mortgage insurer for the purpose of assessing the risk of the individual defaulting on mortgage credit in relation to which the insurer has provided insurance to a credit provider.
Financial hardship information can only be retained by credit reporting bodies for one year and credit reporting bodies will be prohibited from using financial hardship information to calculate a consumer’s credit score.
A credit provider cannot reduce a customer’s credit limit or refuse to provide further credit merely because financial hardship information exists.
A credit provider that has supplied credit information must keep the information supplied accurate, complete and up-to-date, including by supplying information on subsequently opened accounts.
The security and privacy of a consumer’s credit information will be preserved and protected.
Consumers will be able to access their credit information that is held by a credit reporting body free of charge every three months and credit reporting bodies will be required to provide consumers with their rating on a credit score scale and related information if requested by the consumer.
Background
From 1 July 2022 the mandatory credit reporting regime requires credit providers that are large authorised deposit-taking institutions, to supply credit information (including repayment history information) on their consumer credit accounts to credit reporting bodies they contract with.
“Large” is defined in the Banking Executive Accountability Regime (Size of an Authorised Deposit-taking Institution) Determination 2021 as an ADI that has a total asset size greater than or equal to $107 billion.
Other credit providers will be subject to the regime if they are prescribed in regulations.
Until then participation by other credit providers is optional under the Principles of Reciprocity and Data Exchange (PRDE) scheme.
The law relating to Australia’s mandatory comprehensive credit reporting regime is contained in
- Part 3-2CA of the National Consumer Credit Protection Act 2009
- Part 3.8 of the National Consumer Credit Protection Regulations 2010
and - Part IIIA of the Privacy Act
which were amended by the National Consumer Credit Protection Amendment (Mandatory Credit Reporting and Other Measures) Act 2021 and the National Consumer Credit Protection Amendment (Mandatory Credit Reporting) Regulations 2021.
Exemptions are set out in the ASIC Credit (Mandatory Credit Reporting) Instrument 2021/541.
Proposed changes to the Privacy (Credit Reporting) Code to reflect the July 2022 changes are still being considered by the OAIC.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
