ASIC has adopted a temporary no-action position to enable large banks (‘eligible licensees’) to withhold the reporting of certain credit information on consumer credit reports where reporting the information could lead to consumer harm, including where a consumer may be the victim of family violence.
While many credit providers voluntarily supply comprehensive credit information about consumers to credit reporting bodies (such as information about whether the consumer is meeting repayments on their loan), eligible licensees need to supply this information under the mandatory comprehensive credit reporting regime. From 1 July 2022, comprehensive credit information also includes information about financial hardship arrangements (known as ‘financial hardship information’).
Licensees raised concerns with ASIC that including certain credit information in the credit reports of victim-survivors of family violence (such as financial hardship information) could place those consumers at risk of further harm and that flexibility was required to protect vulnerable consumers.
For example, where a victim-survivor holds a loan jointly with their partner (who is the perpetrator of family violence) and they are experiencing hardship, there may be situations where a victim-survivor does not want their partner to know that they have agreed to a financial hardship arrangement with an eligible licensee. In this circumstance, ASIC’s position will enable eligible licensees to help the victim-survivor by withholding financial hardship information on their (and their partner’s) credit report.
ASIC recognises that these risks for victim-survivors could also arise when a credit provider or lessor notifies a joint account holder of the outcome of a victim-survivor’s request for hardship assistance in accordance with the credit provider or lessor’s legal obligations. Accordingly, ASIC has also adopted a no-action position that enables credit providers and lessors to withhold notices to joint account holders in these circumstances.
The letter outlining ASIC’s no-action position is available here.
These positions are temporary and will remain in place pending consideration about whether permanent relief is required.
Background
When a consumer is experiencing difficulties meeting their repayments on a loan or other credit product, they can ask their credit provider/lessor for help. Depending on the situation, the consumer and credit provider/lessor may agree to a financial hardship arrangement, such as deferring or reducing payments for a temporary period.
From 1 July 2022, information about financial hardship arrangements will start to appear on consumer credit reports. This will only include hardship arrangements relating to consumer credit contracts (for example, credit cards, personal loans and home loans). Financial hardship information will only stay on a credit report for 12 months and does not include details of the arrangement or the reason(s) for the hardship arrangement.
ASIC’s Moneysmart website has guidance for consumers on financial hardship, credit scores and credit reports, and financial abuse.
