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From March 1, reforms made to the National Consumer Credit Protection Act will see steps made towards a fairer credit system – but one credit reporting spokesman argues consumers suffering credit impairment may still have unnecessary hoops to jump through.
CEO of MyCRA Credit Rating Repair, Graham Doessel, says better protections will be afforded to Australians experiencing financial hardship once the reforms come into play.
However, he’s worried that things may be moving too slowly for many.
“For those people doing it tough – one of the most important things they need is to be able to open a dialogue with their bank and make moves to guard their asset and their credit file during periods of financial difficulty, and this will be formalised under the new financial hardship laws.”
Yet, he says for credit impaired individuals, the full extent of any improved ‘fairness’ won’t be felt until the implementation of amendments to the Privacy Act 1988 early next year.
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“Whilst there are many aspects to this credit reform which will be helpful to those disadvantaged Australians, such as hardship provisions and capping pay-day loans, the most significant change for people forced ‘on the fringe’ will be within the area of correcting credit reporting mistakes, which won’t be implemented until March 2014.”
He says the Privacy Amendment (Enhancing Privacy Protection) Bill 2012 will change the Privacy Act 1988 in the area of correction of credit reporting inconsistencies, including enabling consumers to force their creditor to justify a disputed listing - and give consequences for credit reporting breaches.
Next month's implementation of the National Consumer Credit Protection Amendment (Enhancements) Act 2012 will also bring reforms to a range of credit areas, with the sole regulator being Australian Securities and Investment Commission (ASIC).
Doessel says while the new obligations for creditors will have significant advantages, they are only part of the credit reform ‘puzzle’, as credit reporting mistakes still occur frequently and individuals can be disadvantaged and refused mainstream credit by a system that has failed them.
#pb# “People with defaults on their credit file can be severely disadvantaged; locked out of mainstream credit for five years. Not all defaults deserve to be there. People are getting let down by the system and have equal trouble correcting their credit reporting mistakes.”
While law-makers argue that there’s a legitimate avenue for correcting credit reporting mistakes for the individual, Doessel says many consumers who’ve dealt with big companies will attest to the difficulty in getting a straight answer, getting someone who knows what they’re talking about and ultimately correcting any mistakes.
“It remains to be seen next year how changes in credit reporting law will allow credit impaired individuals to be able to address inconsistencies on their credit report, which can see them disadvantaged and funnelled into expensive credit such as payday loans.”
He’s concerned about how ‘late payment notations’, which he says are now being recorded as part of the Privacy Act changes, will impact credit suitability.
“So there is still going to be a time of uncertainty for many involved in credit, including for consumers. I know the intention is that eventually, we will see a better and fairer credit system for all – but I think the road to it could be a rocky one.”
