Mandatory Credit Reporting Act passed

The Act amends the National Consumer Credit Protection Act 2009 to establish a mandatory comprehensive credit reporting regime to apply from 1 July 2021 and provides that a credit provider cannot refuse to provide further credit or reduce a customer’s credit limit merely because financial hardship information exists.

It will permit reporting of financial hardship information within the credit reporting system from 1 July 2022 subject to amendments made in the Senate which:

• limit disclosure of financial hardship information by credit reporting bodies to situations where the consumer is seeking to access new credit;
• allow consumers to access their credit information that is held by a credit reporting body free of charge every three months; and
• require credit reporting bodies to provide consumers with their rating on a credit score scale and related information if requested by the consumer.

The obligation to supply mandatory credit information under the regime will begin on 1 July 2021 or the first 1 July that a licensee is an eligible licensee. In particular, the initial bulk supply of credit information is split as follows:
• By 28 September 2021, large ADIs must supply credit information on 50 percent of the consumer credit accounts within the banking group to all credit reporting bodies the large ADI had a contract with on 2 November 2017.
• By 28 September 2022, large ADIs must supply credit information on the remaining accounts, including those that opened after 1 July 2021 and those held by subsidiaries of the large ADI, to the same credit reporting bodies as the first bulk supply.

Participation by other credit providers is optional at this time.

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.

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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.