WHAT WE WANT

1. A more robust regulator

2. Effective complaint handling

3. A more accurate and fair credit reporting system

4. Retention of current restrictions on information reported

 

BACKGROUND

1. More robust regulator

The Office of the Federal Privacy Commissioner (OFPC) is currently the relevant regulator.  We need a regulator which is adequately resourced and prepared to audit and investigate to ensure that systemic issues are addressed.

2. Effective complaint handling

Consumers' complaints about inaccurate or unfair credit reports are not handled adequately. A consumer must first contact the credit reporting agency itself and if unable to resolve the issue, contact the OFPC. 

The OFPC is manifestly under-resourced and is not able to cope with the volume of complaints referred to it.  As a result, waiting lists are growing. OFPC needs to be funded to an adequate level by the Federal Government in order to fulfill its role.

We are not satisfied with the OFPC's abiltiy to deal with credit reporting complaints in a fair and efficient manner, or to provide guidance to credit reporting agencies about their internal complaint handling systems and processes.

Neither the regulator or industry is adequately identifying systemic issues.  An example is the failure of utilities to comply with the current legal requirements for listing.

3. More accurate and fair credit reporting system

The current credit reporting system is manifestly unfair, for a number of reasons:

* it allows a wide range of businesses to access a credit database and not, as one would expect, only traditional credit providers such as banks and finance companies.  Under Determination No 1, the OFPC has opened up access to the credit reporting system to any organisation allowing seven days or more to pay. Consumer advisors are reporing a number of complaints about listings from non-traditional providers such as telephone companies and medical professionals;

* there is no minimum listing amount.  Default listings for as little as $50 are made by some credit providers. A database listing however is enought to deny a consumer the abiltiy to get a loan for a house;

* the onus of proving the accuracy or otherwise of a credit database listing is placed quite unfairly on the consumer.  Errors in listing frequenlty occur, but as records are not necessarily available, it can be very difficult for an individual consumer to dispute;

* consumers are not notified of an adverse listing.  Many only find out when they are refused credit. This may be some time after the adverse listing occurred, making it difficult to dispute as records may not have been kept by the consumer.

A fair credit reporting system must:

* confine access to the credit reporting system to traditional credit providers;

* have a minimum threshhold for listing a default of $100;

* make credit reporting agencies responsible for ensuring the accuracy of credit information files;

* provide that consumers are notified of an adverse listing. This notification should occur immediately after an adverse listing is made.  Consumers should also receive a copy of their complete credit report on an annual basis for no charge (as occurs in the United States).

4. Retain current restrictions on information reported

Under the present system, a credit provider may only list information about consumers in defined circumstances, including the consumers' address, previous addresses, driver's licence number, credit applications, credit defaults after more than 60 days, court judgments and bankruptcy.

Some credit providers want to expand the system to include more detailed information, such as payment behaviour on current accounts.  While this might initially appear attractive to consumers, it provides more information for credit scoring (which assesses the risk to the lender, rather than ability to repay) and allows more scope for inaccuracies.  The current system has enough inaccuracies as it is - the more we expand it, the more danger of these problems expanding.