New credit reporting rules

6/8/2014 11:30AM

New credit reporting rules

In March this year, new credit reporting rules were introduced in order to provide more clarity about people’s credit behaviour.

The changes will affect both consumers and business, both as creditors and debtors. It will particularly affect businesses as they also need to have regard to the new Australian Privacy Principles.

The Comprehensive Credit Reporting system broadens the type of credit information that can be accessed and with whom that data can be shared.

How do rules affect a business that’s owed money?

If a client/customer has defaulted on a payment, and the business wants to report information about that to a credit reporting body, the business first has to let the client/customer know in writing that they intend to disclose the default. The business then needs to wait 14 days before listing with the credit reporting body.

It is important that both the business and the client understand the correct procedure, being that a notice is required and there is a 14 day waiting period, before reporting.

What are the benefits of the new rules?

From a business’s perspective it is now much simpler to check an existing or potential client/customer’s credit history, thus enabling better discovery of clients with a bad track record for paying bills, either late or not paying at all.

For an SMSF this could be a very useful resource when considering a tenant for a property (commercial or residential), thus checking a potential tenant to see if there is a bad track record.

Want more information?

If you would like to find out more about this, the Australian Retail Credit Association (ARCA) has a useful site: www.creditsmart.org.au