Veda Advantage recognises need for further credit reform
11th August 2008: Veda Advantage, Australia’s largest credit bureau, today welcomed the Australian Law Reform Commission’s Privacy reforms, For Your Information: Australian Privacy Law and Practice, and the Australian Federal Government’s early commitment to act urgently to implement credit reporting law reform by December, 2009.
Veda Advantage’s Head of External Relations, Chris Gration, “While Veda Advantage commends the ALRC for its recognition that privacy laws prevent consumers building a positive credit history, the Government needs to pick up the ALRC’s suggestion that more data can be permitted when Government and industry implement a responsible lending framework.
“The ALRC recognises that credit reporting laws do not enable financial institutions to assess whether a person is struggling to meet their debt repayments.
“It is now up to the government to act to ensure banks have the information required to assess whether consumers are struggling,” Mr Gration said.
“Currently, credit reports carry data that gives financial providers only 11% of the picture required to identify and predict credit risk. The ALRC proposed changes will only add 22% of the total. The ALRC’s additional data recommendation - account status and payment history fields - would contribute 64%, significantly improving the industry’s ability to predict and prevent credit defaults.
“Industry is calling on Government to introduce comprehensive credit reports, including 24 month account payment history, by December 2009.
“This review has taken 2 ½ years and in that time interest rates have risen seven times. Bankruptcy levels are at historic highs[1] at the moment, and Australians are clearly worried about access to credit and over-commitment. The ALRC proposals fail to provide an early warning signs of a person becoming financially stressed.
“At a time of tightening credit and rising defaults, the Government must make credit reporting law reform a priority,” Mr Gration said.
The ALRC put on hold the industry’s united call to include a person's account status and payment history over the previous 24 months – how often they have been overdue or missed payments, pending a responsible lending framework.
Senator the Hon John Faulkner said the government would move on this with industry in the context of the COAG (Council of Australian Government) reforms on credit.
Without this additional information, only a minor expansion would allow recording increases in credit limits and noting when a credit account is closed.
“The minimal credit information is regarded by industry as not enough to plug significant knowledge gaps in the consumer credit system. These minor changes will do little to identify people in significant financial stress but who are yet to default,” he said.
Australia is one of only three OECD countries not to have comprehensive credit reports.
“The report handed down today took 25 years to update, yet is still doesn’t align Australia with world’s best practice in credit reporting, meaning Australians – particularly those families who are struggling – will suffer,” Mr Gration said.
For more information please contact:
Sally Robertson at Launch Group : 9270 0289/ 0400 927 003
About Veda Advantage www.vedaadvantage.com
Veda Advantage has been at the forefront of the information business for many decades. Issues such as privacy, data security, fraud and business intelligence have been part of our commercial landscape since the inception of both our company and our industry. Veda Advantage holds the country’s a database of credit files for more than 14.5 million credit-active Australians. The vast majority of applications for credit in Australia are checked against the files held by Veda Advantage – protecting business from financial risk and ensuring consumers are only offered products that fit their risk profile.
You can apply for a copy of your commercial credit file at www,vedaadvantage.com.au.