MAKING NEWS

Thu, 15 October 2009
Banks will be able to view your financial records under proposals


By Nick Gardner

Herald Sun

October 15, 2009 12:01am

* Proposed changes to the Privacy Act

* Banks allowed to see all financial records

* Currently defaults are recorded on files

CONSUMERS will have black marks lodged on their credit files for missing just one utility bill or credit card repayment under proposed changes to the Privacy Act.

The controversial proposals will give banks carte blanche to view every aspect of our financial affairs, including accounts with other institutions, relationships with utility companies, when accounts are opened and closed, and, crucially, the repayment history of all accounts going back two years.

The information will then be used by lenders to assess whether people can afford repayments on new applications for credit, the Herald Sun reports.

The logic is that banks will be better able to adhere to new responsible lending requirements - due to take effect next year - if they can see a new customer's entire financial situation and how they have handled credit in the past.

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Now, only defaults are recorded on credit files. Typically this requires a borrower to fail to repay a debt for 60 or 90 days.

But the new system is likely to operate under a much tighter timeframe - although precisely how late a payment has to be before it is lodged on a credit file has yet to be decided.

"Discussions so far have centred around the payment cycle," said Russell Evans of Veda Advantage, the credit information agency.

"That generally means one month - so if you have not paid your bill by the time the next billing period starts, the suggestions are that it will then be lodged as a missed payment, but it has yet to be set in stone."

Despite protests, the Government says the proposals are in the consumers' best interests because the current system allows only bad information to be logged.

"The proposals would allow somebody who has been through a difficult financial period to demonstrate that they have recovered by meeting all of their repayments in a timely fashion," Mr Evans said.

The new laws are intended to kick in alongside legislation on responsible lending being prepared by Financial Services and Superannuation Minister Chris Bowen and planned to take effect in January 2011.

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