ASIC has taken a temporary no-action position to allow major banks (“eligible licensees”) to suspend the reporting of certain credit information on consumer credit reports where the reporting of such information could result in harm to the consumer, including where a consumer may be a victim of domestic violence.
While many credit grantors voluntarily provide comprehensive consumer credit information to credit reporting agencies (such as information about whether the consumer is meeting their loan payments), eligible licensees must provide this information. under the mandatory full credit assessment scheme. As of July 1, 2022, the complete credit disclosure also includes information on provisions in the event of financial hardship (referred to as “financial hardship disclosure”).
Licensees have raised concerns with ASIC that including certain credit information in the credit reports of survivors of domestic violence (such as financial hardship information) could expose those consumers at risk of further harm and that some flexibility was needed to protect vulnerable consumers.
For example, when a victim-survivor holds a loan jointly with her partner (who is the perpetrator of family violence) and she is having difficulty, there may be situations where a victim-survivor does not want her partner is aware that it has agreed to a financial hardship arrangement with an eligible licensee. In these circumstances, ASIC’s position will allow eligible licensees to assist the victim-survivor by withholding financial hardship information from their (and their partner’s) credit report.
ASIC recognizes that these risks to victim-survivors may also arise when a credit grantor or lessor notifies a joint account holder of the outcome of a request for victim-survivor hardship assistance in accordance with legal obligations of the credit provider or lessor. As a result, ASIC has also taken a no-action stance that allows 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 a determination of whether a permanent replacement is required.
When a consumer is having difficulty repaying a loan or other credit product, they can ask their credit provider/lender for help. Depending on the situation, the consumer and the credit provider/lessor may agree to an arrangement in the event of financial hardship, such as deferring or reducing payments for a temporary period.
Starting July 1, 2022, information about financial hardship provisions will begin to appear on consumer credit reports. This will only include hardship provisions relating to consumer credit agreements (eg credit cards, personal loans and home loans). Financial hardship information will only stay on a credit report for 12 months and does not include the details of the arrangement or the reasons for the hardship arrangement.
ASIC’s Moneysmart website offers consumer advice on financial hardship, credit scores and credit reports, and financial abuse.