Changes to positive credit reporting come into play tomorrow, and while brokers may not notice the difference immediately there is one “trap” to be wary of, says a senior lawyer.
“Positive credit reporting will take a while to have any impact as lenders decide whether to contribute data,” Gadens Lawyers partner Jon Denovan tells Australian Broker.
“Once they decide to contribute data lenders need to work out how to transfer that data to CRBs –credit reporting bodies – the new name for credit reporting agencies.”
Just as in the old regime, brokers cannot get credit reports as brokers, said Denovan.
“However, brokers used to be able to get credit reports as ‘agents’ for borrowers. Some like to get credit reports so that they don’t lodge deals which are knocked back for poor credit. Under the new regime, brokers can get credit reports as ‘access seekers’ – it’s really just a change in name and to be an access seeker they must be appointed by the borrower.”
Under the new regime, lenders will get out of a CRB what they put in, Denovan said.
“If they only put in negative (default) information, they will only get negative (default) credit reports. When a borrower or a broker acting as access seeker for a borrower applies for a credit report, they will receive the ‘full’ report containing any positive credit information.”
There are two types of positive credit information – loans made and repayment history information. A lender may participate in none, one, or both, Denovan said.
For brokers to comply they must have a credit policy of their website (if they have a website) and they should update their privacy consent – a new pro forma is available on the MFAA website, said Denovan.
It all seems fairly straightforward – however there is one trap. If brokers outsource any of their operations off shore or to other businesses, appropriate consent is important to avoid breaching the act, Denovan said.
The Credit Reporting Code will replace the existing Credit Reporting Code of Conduct and aims to clarify and supplement the obligations under Part IIIA of the privacy amendments and the Privacy Regulations 2013 as they relate to credit reporting participants.
Some of the changes include:
- New types of credit related personal information that can be collected and held in the credit reporting system, including repayment history
- Greater protection for consumers to access and correct credit related personal information held by credit reporting bodies and credit providers
- A positive obligation on credit reporting agencies and credit providers to substantiate the correctness of the personal information held.
A copy of the Credit Reporting Code can be accessed here
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