Credit reporting is set to be overhauled. In our arena of helping consumers make complaints and dispute their credit reports – ease of credit listing dispute for consumers would be a positive move. We look at just what to expect from these new credit laws in terms of disputed credit listings. Will consumers be given a bigger voice to make credit listing complaints?
By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.
In a statement to the media on Wednesday, Attorney-General Nicola Roxon announced the next step in major legislative change to credit reporting. Amendments to the Privacy Act (1988) will be introduced during the Winter Sitting of Parliament.
This finalises a long process of consultation following original recommendations made in a report by the Australian Law Reform Commission (ALRC) For your information: Australian Privacy Law and Practice back in August 2008.
The ALRC report recommends 295 changes to improve Australia’s privacy framework, including major changes to credit reporting law. The government then opted to respond to the Report in two stages, the first of which was released in October 2009. The first stage response outlines the government’s position on 197 recommendations relating to:
• developing a single set of Privacy Principles
• redrafting and updating the structure of the Privacy Act
• addressing the impact of new technologies on privacy
• strengthening and clarifying the Privacy Commissioner’s powers and functions
• introducting comprehensive credit reporting and enhanced protections for credit reporting information
• enhancing and clarifying the protections around the sharing of health information and the ability to use personal information to facilitate research in the public interest.
Further information is available from www.ag.gov.au/Privacy/Pages/Privacy-Reforms.aspx.
Draft legislation on this First Stage Response for the Credit Reporting provisions was put to the Senate for tabling, and for referral to the Finance and Public Administration Committee to consider. The Committee’s final report on the credit reporting provisions was released in October 2011.
On Wednesday the Attorney-General promoted changes to credit reporting arrangements as a ‘modernisation’.
“There have been big changes to the way we access finance since 1990 when the existing credit reporting provisions came into effect,” Ms Roxon says.
She says benefits for consumers include:
• making a clear obligation on organisations to substantiate, or show their evidence to justify, disputed credit listings
• making it easier for individuals to access and correct their credit reporting information
• prohibiting the collection of credit reporting information about children
• simplifying the complaints process by removing requirement to complain to the organisation first, complaints can be made directly to the Privacy Commissioner, and by introducing alternative dispute resolution to more efficiently deal with complaints.
“Many consumers have expressed their frustration at not being able to understand their credit rating.
“These changes will provide much more power to consumers to be able to access and, if necessary, correct their credit reports.”
The Government expects the credit industry will benefit because the reforms provides a more accurate picture of an individual’s credit situation to help them make a robust assessment of credit risk, which is expected to lead to lower credit default rates.
The role of the Privacy Commissioner will also be boosted so complaints and investigations can be more easily resolved.
The Privacy Commissioner said in a speech on Exploring the Changing Privacy Landscape and Impending Regulations on Friday that he can see benefits for consumer credit ratings.
“Turning now to the credit reporting arrangements, changes include a clearer obligation on organisations to substantiate, or show their evidence to justify, disputed credit listings.
On the consumer side, there will easier access for individuals to correct credit reporting information,” Privacy Commissioner Timothy Pilgrim said.
The clearer obligation for on organisations to substantiate or show evidence to justify disputed credit listings would be a positive change cementing requirements of creditors and hopefully easing some of the difficulty in having credit reporting information corrected.
Currently the official procedure for making complaints to creditors about credit listings has been inadequate. The section on Complaints in the Government’s Exposure Draft introduced a clear process of complaint for the consumer and the obligations of creditors and or credit reporting agencies to follow when a consumer makes an official complaint including escalation of that complaint.
But the actual process came under criticism from reports to the Senate Committee for its complexity and two-step process of correction request and official complaint – which could confuse consumers.
The Office of the Australian Information Commissioner (OAIC), Consumer Action Law Centre and Consumer Credit Legal Centre NSW voiced concern that the two stop approach resulted in a complex complaints handling process.
It was also criticised by some creditor bodies for sometimes crossing over existing law in their individual Acts.
It is unclear what the outcome will be from the Senate and what will be certain to be included as new law in the Complaints arena.
It is still likely that as consumers will need to address complaints as they relate to law, it could remain difficult for consumers who are not skilled in credit reporting law and don’t have the time to get educated on it to make a successful case to creditors in some instances. So whilst they may be provided with more justification from the creditor on why the listing should be there, the process could still put consumers in the position of needing to be savvy with credit reporting law to have muscle to dispute that justification.
And whilst consumers may find the official process of complaint easier, there still may be issues around negotiating with creditors on their own behalf which could hinder their chances of successful dispute.
For more information on how credit listing errors could affect your ability to obtain credit contact MyCRA Credit Rating Repairs 1300 667 218 or visit the main website www.mycra.com.au.
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