Briefing paper: Credit reporting and responsible lending

The Australian Law Reform Commission (ALRC) recently recommended that some additional types of information should be allowed on individual credit reports, but that repayment history information should only be allowed once Government has implemented responsible lending obligations in law.

Extending access to personal financial information on credit reports provides lenders with a powerful tool. However, whether this tool improves lending practices or worsens debt stress depends on how it is used by lenders. The same information could be used to lend more responsibly – but also for determining “up-sell” amounts, profiling borrowers for marketing and giving faster approval for “impulse” credit products.

This is why the ALRC understood that a responsible lending framework must be in place before lenders have access to more personal information. It came to this recommendation after a comprehensive, 2 ½ year long inquiry process involving consultation with hundreds of government, industry and community stakeholders and individuals.

Read our full briefing here: Credit reporting and responsible lending.

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