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Don't stigmatise Australians for missed payments, say banks

Nick Bendel avatar
Nick Bendel
- 2 min read
Don't stigmatise Australians for missed payments, say banks

New comprehensive credit reporting rules must not discriminate against consumers who have had financial difficulties, according to the Australian Bankers’ Association.

The ABA said that banks should be able to explain a customer’s credit history in detail when the new comprehensive credit reporting regime takes effect on 1 July 2018.

This would be particularly relevant if the customer had experienced financial difficulty and missed payments, the ABA said in a submission to the federal Treasury.

Banks often reach understandings with customers who experience financial difficulty – but this should not be seen as proof of a bad credit history, according to the ABA.

Rather, it should be seen as a common occurrence that could happen to any customer through no fault of their own.

What is comprehensive credit reporting?

“A mandating of CCR will change the way banks share customer information, resulting in greater competition and better deals for customers with a good credit history. Unlike the current system, in which only loan applications and loan defaults are recorded and used to assess an individual’s credit rating, the federal government’s new mandate will require banks to provide a customer’s full repayment history.”

-Australian Bankers’ Association

“People can fall into hardship for many reasons”

ABA chief executive Anna Bligh said that while comprehensive credit reporting could really help Australians, the government needed to ensure no one was discriminated against.

“People can fall into financial hardship for many reasons, such as natural disasters, prolonged drought, the loss of a job or the death of a partner,” she said.

“Banks have extensive and generous programs for customers experiencing financial difficulty and always stand ready to find a solution which will work for the customer.”

Ms Bligh said the government’s draft legislation doesn’t allow banks to properly communicate special circumstances regarding missing payments.

“There needs to be an easy way to flag this in a customer’s history to ensure they aren’t unfairly denied access to credit when they have ticked all the right boxes by working with their bank when encountering problems paying back their debts,” she said.

Disclaimer

This article is over two years old, last updated on March 7, 2018. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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