The Government has released for consultation an exposure draft of the National Consumer Credit Protection Amendment (Mandatory Comprehensive Credit Reporting and Other Measures) Bill 2019. It is based on the 2018 Bill which lapsed when the election was called earlier this year but contains additional provisions relating to financial hardship information.
Mandatory comprehensive credit reporting regime
The Bill amends the National Credit Act to establish a mandatory comprehensive credit reporting regime which applies from 1 April 2020. The amendments do not require or allow disclosure, use or collection of credit information beyond what is already permitted under the Privacy Act 1988 and the Privacy (Credit Reporting) Code 2014.
The mandatory regime applies to ‘eligible licensees’ which initially are large ADIs that hold an Australian Credit Licence. An ADI is considered large when its total resident assets are greater than $100 billion. Other credit providers will be subject to the regime if they are prescribed in regulations.
Participation by other lenders will remain optional.
The supply of information under the mandatory regime includes an initial bulk supply of credit information and an ongoing requirement to keep information up-to-date and accurate.
The initial bulk supply is split across two years:
• By 29 June 2020, large ADIs must supply credit information on 50 percent of the consumer credit accounts within the banking group to all credit reporting bodies the large ADI had a contract with on 2 November 2017.
• By 29 June 2021, large ADIs must supply credit information on the remaining accounts, including those that open after 1 April 2020 and those held by subsidiaries of the large ADI to the same credit reporting bodies as the first bulk supply.
Regulations will set out the circumstances when a credit reporting body can share the credit information supplied through the mandatory regime.
ASIC will be responsible for monitoring compliance with the mandatory regime. It will have new powers to collect information and require audits to confirm the supply requirements are being met. ASIC can also prescribe the technical standards for the reported credit information.
Financial hardship information
The Bill will amend the Privacy Act 1988 to permit reporting of “financial hardship information” within the credit reporting framework.
This new category of “credit information” would comprise a ‘hardship arrangement indicator’ and a ‘contract variation indicator’.
The hardship arrangement indicator would appear on a consumer’s credit report from the first month that they make a repayment under a temporary hardship arrangement. The indicator would recur every month a hardship arrangement is in place.
The contract variation indicator would appear on a consumer’s credit report in the month that they make the first repayment under a permanently varied contract. This indicator would only appear once in the month that the varied contract takes effect.
Credit providers will be permitted to disclose financial hardship information to credit reporting bodies.
Credit reporting bodies will be permitted to collect, use, disclose and retain hardship information.
Credit reporting bodies do not currently incorporate financial hardship information in the calculation of consumer’s credit scores. There will be no change to the current position.
Variations to the Privacy (Credit Reporting) Code 2014 will be discussed with industry and the OAIC to provide detailed guidance on the implementation of new credit reporting obligations.