positive credit reporting

Positive credit reporting (part 1 of 4 due to limit of test here)

Mortgage Brokers

Many brokers are not aware what this will mean for their clients as very little has come about as yet.  There are 4 main levels of credit reporting which lenders can choose to partake in. The potential is information about your loans, rates, amounts and repayments will be shown for another lender to see.

Like now: displaying defaults, writs, summons and judgements and inquiries.
Loans made
Repayment history

The 3rd and 4th is what concerns many people. Currently one lender cannot see if a person has been declined elsewhere, only that the person has been elsewhere if they have, and where they have been and how often of course. It is easy for people to lie when asked the outcome of an inquiry on their credit report by saying they did not proceed of their own accord when in fact they may have been declined.
Late payments will appear, any small blemishes will appear, whereas now they don’t.

Currently: brokers must make reasonable inquiry, and follow responsible lending standards (There is no case law determining the correct interpretation of responsible lending and there probably won’t be given that dispute resolution is handled by Costl). They will be known as an ‘access seeker’ when obtaining a credit report for a client

A Broker can obtain a credit report of their client, but must not send that to a lender even they it may impact on responsible lending. This is a catch 22. The broker becomes aware of something but is not allowed to share this with the new lender. The reason they cannot share it is that the new lender may not have elected to take part in the level of sharing of information that is on the report (the lender may not be registered for that amount of disclosure) therefore privacy laws would be broken if a broker shares this. The broker is probably obliged to seek permission from the customer to share this pertinent information, and if the customer refuses the broker should make a decision to continue servicing that customer. That customer would be viewed as dishonest possibly.

Some believe, including one of the people who wrote this legislation, that the full extent of credit reporting may not see the light of day. There are broker committees and lender committees involved in making decisions and we all know, generally speaking how useless and a waste of time board meetings or other meetings can be, lots of talk and little implementation. Many people spend all day in meetings feeling important but often very little gets done.

There is a risk there will be a severe lack of uniformity with positive credit reporting. Let’s hope it is not as open to interpretation as responsible lending is. Different lenders have different perceptions and it has not been tested.