Australia's decision to allow financiers greater access to
people's credit histories has given the finance industry hope
New Zealand will do the same.
The Australian Government has accepted many of the
recommendations of an Australian Law Reform Commission report
into privacy - including that the country move to what is
known as positive credit reporting.
New Zealand and Australia are unusual among OECD countries in
retaining negative credit reporting systems.
This means credit agencies can only keep limited data on a
person, including "negative" aspects such as whether they
have defaulted on bills or been bankrupted.
Credit reports show how many times a person has applied for
credit, but not what for or whether it was approved.
A positive system would allow the agencies to keep more
comprehensive records, such as mortgage and credit card
details and repayment histories.
The finance industry argues this would help it make better
lending decisions, refusing credit to those who are
overstretched and giving a second chance to people who have
run into trouble in the past.
The Privacy Commissioner is conducting a review of New
Zealand's credit reporting privacy code, and had been waiting
to see which way the Australians would go.
"The Australian situation will influence the sort of
decisions we take in New Zealand," Commissioner Marie Shroff
told a New Zealand Credit and Finance Institute conference
last week.
"We are mindful of continuing the alignment that currently
exists where that will be useful."
Australia is looking at adding four new pieces of information
to personal credit files. -
• The type of each current credit account (mortgage, credit
card, personal loan, etc).
• The date each account was opened.
• The limit of each account.
• The date each account was closed.
This is broadly in line with what the New Zealand credit
reporting and finance industry is calling for.
In reference group discussions held by the Privacy
Commissioner as part of her review there was general
agreement credit reports should list the type of credit and
amount approved, the lending institution, whether the account
was open or closed and relevant dates, and the repayment
history over two years.
Credit and Finance Institute national president David Young
said any move Australia made in this regard "points us in the
right direction".
It was likely New Zealand would follow suit.
"The main users of such information are of course the banks,
and who owns them?"
The credit agencies have been lobbying for some time for a
shift to comprehensive reporting.
In August, Veda Advantage launched a new points system giving
all New Zealanders a creditworthiness score.
The range is from minus 330 to plus 1000, and most people are
expected to rate over zero.
However, those with a score less than 100 will find it
difficult to obtain credit.
The points system is based on existing credit records, and
Veda's local head John Roberts has said it would become more
relevant if New Zealand moved to positive reporting.
