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.