Credit reporting reform good for consumers & lenders

14 October 2009

Credit unions and mutual building societies welcome the Australian Government’s announcement today that it will reform credit reporting to allow lenders to have better information about consumers seeking credit.

“This is good news for responsible lenders and for borrowers and we look forward to engaging with the Government on the detail of its reponse to the Australian Law Reform Commission recommendations on credit reporting and wider privacy law reform,” said Luke Lawler, Senior Adviser at Abacus – Australian Mutuals.

The Government has announced it will legislate to allow five positive datasets to be included on an individual’s credit report: the type of each active credit account, date of opening and closure of account, account credit limits and credit repayment history. Repayment history will not be available to lenders until new responsible lending obligations are in place under the National Consumer Credit Protection Bill 2009.

“Credit unions and mutual building societies lead the market in terms of responsible lending,” Lawler said.

“According to the Reserve Bank’s latest Financial Stability Review, housing loan arrears for building societies are running at around half the rate of banks’ home loan arrears and for credit unions, home loan arrears are under a quarter of the banks’ rate at 0.15 per cent compared to 0.62 per cent.

“As our new Mutual Banking Code of Practice says, ‘we will always act as responsible lenders.’

“The Code says ‘we will base our lending decisions, including decisions to extend existing credit facilities, on a careful and prudent assessment of your financial position.’

“This reform to credit reporting will further assist credit unions and mutual building societies to lend responsibly and act in their interests of their members.

“This reform has the additional benefit of assisting customer-focused smaller lenders to compete with the major banks. This is because consumers will be less reliant on an existing banking relationship to obtain credit,” Lawler said.

For further information, contact:

Pamela Eldridge
Senior Adviser – Media
02 8299 9024, 0423 843 790
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Luke Lawler
Senior Adviser – Policy & Public Affairs
02 6232 666, 0418 213 025
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