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Brokers have cautiously welcomed impending changes to credit reporting, with the final piece of the legislative jigsaw now put in place.
The Credit Reporting Privacy Code has been registered by the Office of the Australian Information Commissioner, which will allow the new rules to come into effect on March 12.
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The Australian Retail Credit Association (ARCA) welcomed the new system: “Credit reports currently only feature negative information on individuals, such as defaults,” the association said in a statement.
“From March this year, consumers will have access to important consumer rights in the credit reporting system that will help them take better control of their credit history, and lenders will gain access to new data that can help them make better lending decisions.”
Home Loan Experts’ senior mortgage consultant, Hank Hong, said the new system would give brokers and lenders a more complete picture of a customer’s credit history.
Mr Hong told The Adviser the reforms would also “clean up the industry” by protecting heavily indebted consumers from accessing new loans.
Seven Point Finance owner Brett Amos said he hoped the new system would be an improvement on the current model which, he said, unfairly denied loans to some people.
Mr Amos added, however, that it was too early to say how the reforms would affect consumers and what impact they would have on brokers’ compliance obligations.
“The proof of the pudding is in the eating. We’ll have to see how it works in practice,” he told The Adviser.
Aggregator Finsure forecast that the new credit reporting rules would benefit both brokers and comsumers, and managing director John Kolenda said brokers would be able to offer greater value to clients with positive creditor histories.
“If you look at some of the models where [positive reporting] is already in play, it has positive implications for borrowers in being able to access better pricing and products,” he told The Adviser.
ARCA chief executive Damian Paull said it struck a fair balance between the interests of consumers and the industry.
“These reforms will bring Australia into line with other OECD countries and will help empower consumers by improving awareness and engagement with their credit report – as is common in other countries,” he said.
