Credit reporting ed­u­ca­tion

Business First - - NEWS -

Sev­eral months since com­pre­hen­sive credit reporting (CCR) went live in Aus­tralia, the Aus­tralian Re­tail Credit As­so­ci­a­tion (ARCA) has re­in­forced the crit­i­cal role CCR plays in con­tribut­ing to the ro­bust­ness of Aus­tralia’s $1.49* tril­lion re­tail credit in­dus­try and re­duc­ing fi­nan­cial ex­clu­sion.

Ac­cord­ing to ARCA the pres­ence of a prop­erly reg­u­lated CCR sys­tem as­sists lenders to iden­tify fi­nan­cial risks more ac­cu­rately (and po­ten­tially ear­lier), im­proves eco­nomic per­for­mance of re­tail credit lend­ing, in­creases ac­cess to main­stream re­spon­si­ble credit and as­sists con­sumers to avoid over in­debt­ed­ness by tak­ing greater con­trol of their credit iden­tity.

Speak­ing at In­forma’s in­au­gu­ral Pri­vacy Re­form in Credit Reporting Fo­rum in Syd­ney, ARCA CEO Damian Paull said there was a clear link be­tween credit reporting and in­creas­ing credit ac­ces­si­bil­ity.

“Global stud­ies** show com­pre­hen­sive credit reporting can be used as a tool to in­crease credit ac­cess and stim­u­late growth. CCR is also a key com­po­nent of fi­nan­cial in­clu­sion by in­creas­ing the pool of el­i­gi­ble con­sumers who can re­spon­si­bly ac­cess credit to buy es­sen­tial goods or ser­vices that are be­yond the monthly house­hold budget, such as ve­hi­cles and fur­ni­ture,” he said.

Ear­lier in the year ARCA launched ed­u­ca­tion site Cred­itS­mart to give con­sumers and fi­nance pro­fes­sion­als more de­tailed in­for­ma­tion on the credit reporting laws and how to ac­cess credit re­ports. ARCA is cur­rently work­ing with key in­dus­try bod­ies and fi­nan­cial ser­vices providers to raise greater aware­ness of the im­pli­ca­tions of the new credit reporting regime.

“The World Bank quite rightly states that credit reporting is a vi­tal part of a coun­try’s fi­nan­cial in­fra­struc­ture and is an ac­tiv­ity of pub­lic in­ter­est. While it’s still early days for com­pre­hen­sive credit reporting in Aus­tralia, some con­sumers still don’t re­alise they are en­ti­tled to a free credit re­port ev­ery year, or what the new credit reporting en­vi­ron­ment means for them.

“Change isn’t go­ing to hap­pen overnight but clearly more needs to be done in plac­ing credit reporting more firmly on the fi­nan­cial lit­er­acy agenda,” he said. *RBA data March 2014 **Po­lit­i­cal & Eco­nomic Re­search Coun­cil (PERC) stud­ies (US) – 2009/10.

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