Australian Bankers’ Association calls for
comprehensive credit reporting

Sydney, 24 August, 2009: The Australian Bankers’ Association (ABA) said if the National Consumer Credit Protection Bill 2009 will include responsible lending obligations, then more comprehensive credit reporting must be put in place at the same time.

The ABA’s Chief Executive, David Bell, and ABA Director of Retail Regulatory Policy, Ian Gilbert, today made this point to the Senate Economics Committee in Sydney which is inquiring into the National Consumer Credit Protection (NCCP) Bill
2009.

This NCCP bill implements a decision by the Council of Australian Governments to replace state-based legislation with a national regime for consumer credit regulation and oversight including licensing and dispute resolution.

Low default rates demonstrate that banks have applied responsible consumer credit lending practices across the range of consumer credit products on offer today.

Mr Bell said: “In the case of credit card products there appears to be a lot of community misunderstanding. The practice of banks offering credit card limit increases to their existing customers is a case in point. These offers are made to customers who have shown an ongoing sound level of performance with their credit card.”

“At the time a customer applies for a credit card facility the only information about the customer’s performance, if they have credit facilities with other providers, is if a default has been logged on the customer’s credit bureau file.”

“The credit file does not list how much debt the customer has outstanding or the credit limit the customer has secured from other providers.”

“Comprehensive credit reporting would provide the option to access the credit limits. However, disclosure of the credit balance would give the credit provider more information about the customer’s current level of commitment.”

In 2008, the Australian Law Reform Commission (ALRC) recommended that the current credit reporting regulation should be expanded to include: type of credit account opened, date opened, current limit of each account opened, date closed and whether over a 24 month period the debtor was meeting the repayment obligations and, if not, the number of repayment cycles in arrears.

The ALRC recognised the compelling argument that more comprehensive credit reporting could assist credit providers to practice responsible lending.

The ABA believes that the timing for the introduction of more comprehensive credit reporting as recommended by the ALRC should be aligned with the start of the responsible lending obligations for banks under the Bill in 2011.

For further information:

Heather Wellard, ABA PR, P: 02 8298 0411 M: 0409 830 439
           
ENDS