Privacy Act warnings equal 'scare mongering': Gadens

by AB28 Jun 2013

Access to credit will fall with the introduction of new credit reporting data being collected now, claims MyCRA Credit Rating Repair CEO, Graham Doessel - but one top lawyer says the warning could constitute 'scare mongering'.

Doessel says credit numbers are expected to decline as more data is reported about consumers’ credit habits in March next year following the implementation of the new Privacy Act amendements.

 “Australian consumers are currently under the microscope with their repayments and if they are more than five days late with their repayments to licenced credit providers, that is going on their credit record now for two years and will show up as of March next year,” says Doessel.

“In my opinion, this is going to trip up many Australians. With only a five day grace period proposed, it may mean many Australians are unnecessarily banned from credit due to simple billing mistakes, lost paperwork and other payment mishaps.”

But Gadens Lawyers senior associate, Amy Ciolek, says the changes are likely to have a generally positive impact on brokers and clients. 

“The amendments to the Privacy Act will provide greater transparency and provide credit industry participants with more comfort that their assessment of whether credit is not unsuitable for an individual borrower is accurate,” she says. 

“This is arguably better for both the borrower and the broker, as it likely to lead to improved responsible lending behaviours.  Also, if positive credit reporting shows that a borrower has no negative history, or their historic record doesn’t show defaults, they may be more likely to be perceived as a lower credit risk, so may in fact have better access to credit.”

Ciolek says brokers should research the ‘high level impact’ to their individual business and distribution structures, as well as educate themselves about any new obligations imposed by their lenders.

“In addition, brokers will need to ensure their privacy consent has been updated to reflect the new law.  Brokers should also familiarise themselves with the new Privacy Principals to make sure they understand their obligations.”

Furthermore, Ciolek warns brokers to be wary of ‘scare mongering’ when it comes to the new legislation.

“Credit repair agencies are a real concern in the credit environment.  They frequently use scare mongering and aggressive tactics to achieve certain outcomes for individuals (who pay for the outcome).  Bypassing the law in this way doesn’t necessarily benefit the individual involved in the long term. Often education and financial counselling would facilitate a more useful and beneficial outcome.”

COMMENTS

  • by Noel 28/06/2013 10:46:15 AM

    Funders will always want to lend. This is where they get their profit. It will now be a matter of a higher price for borrowers who do not have a clear history

  • by Andrew 28/06/2013 10:51:34 AM

    The "how can I reject this application" credit staff will love this change but the banks will be hobbled into not lending anything and that will hurt them. I have always said that if banks knew the absolute truth about every applicant, they would never write a damn thing!

  • by Gary 28/06/2013 11:05:37 AM

    A great view from Gadens!

    It is clear to me that comprehensive reporting will make it easier for good borrowers to get credit, and tougher for high-risk applicants to get any.

    Brokers should find it easier to get quality deals over the line, and there should be less sob-stories on Today Tonight crying "it's the banks fault for lending me the money!"