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Financial hardship information will soon feature on a person’s credit report, after new laws aimed at giving consumers better access to credit were passed.
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New credit reporting bill passes Parliament
05 February 2021
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The National Consumer Credit Protection Amendment (Mandatory Credit Reporting and Other Measures) Bill 2019 passed both houses of Parliament this week after first being proposed by then-Treasurer Scott Morrison in 2017.
The new law will see credit providers allowed to share financial hardship information with credit reporting bodies, who will be permitted to collect, use, disclose and retain such information.
The government believes the reporting of financial hardship information will allow credit providers to have a more accurate picture of a consumer’s repayment obligations and whether they are meeting those obligations, facilitating more informed lending decisions.
The law change will also allow people to access their credit reporting free of charge every three months, with credit reporting bodies required to provide consumers with their rating on a credit score scale and explanatory information once a request has been made.
The changes will kick in from 1 July 2022.
The bill will also now require large banks to participate in the mandatory comprehensive credit reporting regime from 1 July 2021, allowing them to obtain both positive and negative information on a person’s credit history.
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The government expects that the mandatory regime will allow consumers to have better access to credit, with more reliable individuals able to seek more competitive rates when purchasing credit.
Consumers that possess a poor credit rating will be able demonstrate their creditworthiness through future consistency and reliability.
Treasurer Josh Frydenberg and Assistant Treasurer Michael Sukkar said the new law would ultimately provide individuals and small businesses better access to finance.
“The strengthened regime will deliver benefits to lenders and borrowers and drive competition in the lending market while preserving and enhancing important security and consumer protections,” said Mr Frydenberg and Mr Sukkar in a joint statement.
“With a deeper, richer set of credit data, consumers will be able to demonstrate their creditworthiness and seek a better deal, while lenders will have greater opportunity to compete for customers with positive credit histories.”
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