From the 12th of March, The Privacy Act (1988) has been amended to introduce comprehensive credit reporting.
What this means is when a lender runs a credit check, not only will it list credit enquiries clients have made in the past, but the following other aspects of credit:
- Account open dates and close dates
- Type of credit accounts still active (e.g. credit cards, personal loans, home loan)
- Limit of active credit facilities
- Monthly repayment history on credit accounts (e.g. if a payment was missed and when)
Benefits will include:
- Consumer Credit defaults less than $150 will be removed from your credit report
- If you have a consumer credit clear-out listed on your report (credit default) and it has been paid, it will be removed from your credit report if it is over 5 years old.
Whilst some are labelling this an 'invasion of privacy', I believe it is a fantastic initiative to remove non-disclosure with finance applications and bring in a fairer system.
As brokers we are at the mercy of clients when it comes to them listing their liabilities on their A&L, and at My Mortgage Freedom we have implemented a robust compliance process within our business and every application to ensure we aren’t exposed to fraud and non-disclosure.
So this lifts the burden for us, but will still be an integral part of what we do to ensure we comply with our duty of care under NCCP.
Due to the monumental change in credit reporting, it seems that the banks won’t have this information feeding to credit agencies for some time, and I can understand why. It’s a huge job! Especially to monitor monthly with any arrears!
We may lose a few deals due to servicing and non-disclosure but in the bigger picture it’s the best thing that’s happened to the industry in a long time and will only benefit us in the long run.
Winners – lenders and brokers
Losers – fraudsters and non-disclosing clients