COSL blasts credit repair companies

by Adam Smith21 Aug 2014
The Credit Ombudsman has delivered harsh words to credit repair companies.

COSL has announced it is proposing to no longer deal with representatives of consumers - namely credit repair companies - "who behave badly".  Ombudsman Raj Venga warned consumers to be wary of credit repair companies who claim to be able to improve credit reports, and said many companies charge considerable fees.

"We have seen instances of consumers being charged an upfront fee of up to $900, and then around $1,000 per default listing, even when the debt for which the consumer was default listed is under $500," Venga said.

Venga said COSL is routinely approached by credit repair firms, while its services are already provided to consumers at no charge. He said consumers could be paying significant amounts of money to access a service that is already available to them free of charge.

"Whether the complaint is made by the consumer using a credit repair company or to us directly, our finding on the merits of the complaint and its outcome can only be the same. For example, if the complaint is that a default listing should not have been made and we find that the default was correctly listed, we will not require the removal of the default listing. Conversely, if we find that the default should not have been listed, we will order the default listing to be removed," he said.

Venga said more than 40% of the complaints COSL receives about credit reporting matters are from credit repair companies. COSL's proposal to cut off its dealings with credit repair companies will make it harder to "game the system", Venga said. He claimed companies often tried to use the threat of COSL service fees to pressure financial services providers into removing default listings or making unmerited corrections to credit reports.

The removal of default listings that are correctly listed compromises the integrity of the credit reporting body’s database. This is not in the public interest," Venga said.

COMMENTS

  • by QEDRisk 21/08/2014 9:27:46 AM

    Where is the bad behaviour? I mean, I'm sure it exists but not in this article.

    Consumers often are clueless about what they can do if they have dodgy defaults on their record. These businesses provide a service to help those consumers and they have a right to charge for that service. Trying to link the amount of the default to the price of the service is ludicrous.

  • by marty 21/08/2014 9:49:22 AM

    Agree Greg. The system is rigged in favour of the credit providers and what is wrong with outsourcing the process to a company who deals with this stuff day in day out. I know I would gladly pay $1900 to have a $500 default removed if it meant the difference between not being able to secure a home loan or not. Sorry Raj is off the mark here.

  • by not so old broker 21/08/2014 9:52:05 AM

    hard to see where QED is coming from. I'm sure s/he would not want to pay $1900 for a defaulted amount of $500! Where's the logic - or the justice? Try being a small business that's owed $500 and is bullied by these so-called service providers.