The financial services industry is making a late bid to have a more open approach to credit reporting. The industry has pitched an innovative system of coded payment histories to go on credit files.The Australian Law Reform Commission, which is reviewing credit reporting rules as part of a review of the Privacy Act, issued a discussion paper in September that proposed a move to more comprehensive credit reporting but stopped short of recommending a move to the full positive reporting model that has been promoted by a majority of credit providers.The ALRC will take final submissions in December and make recommendations to the Government in the New Year.The ALRC discussion paper recommended that a number of additional pieces of information be allowed to go into credit files. These include the date a credit account is opened and the date it is closed, the credit limit, the name of the credit provider and the type of credit being provided (credit card, personal loan and so on).Under the current rules credit files prepared by credit reporting agencies can include the identity of the borrower, notice of overdue payments, cheques worth more than $100 that have been dishonoured twice, bankruptcy orders and court judgements, previous applications for credit reports and a credit provider's opinion that that individual has committed a serious credit infringement.The ALRC rejected industry submissions calling for the inclusion of current balance (the amount of the limit drawn down) and repayment history. The industry's latest proposal is that the payment history be coded, so that instead of reporting the amount owing on an account and the amount paid each month, a numerical code would indicate that payments were up to date, or there were 30 day arrears, 60 day arrears and so on.The credit reporting agency Veda Advantage yesterday released the results of a survey that indicated that the currency system is not working. A phone poll commissioned by Veda (which has become unusually active in its public relations of late) and conducted by Galaxy Research found that 2.7 million Australians had misrepresented their financial details on credit applications by under-reporting their expenses and credit commitments, and exaggerating their work history and overestimating the value of their assets.In its discussion paper, the ALRC acknowledged that the current system creates an information asymmetry, where the individual applying for credit knows more about their financial affairs than the credit provider does. It accepted that such an arrangement led to adverse selection, where the cost of credit was cheap for bad credits and expensive for good credits, and also to moral hazard, where some credit applicants would be encouraged to commit fraud.It accepted that more information available for risk assessment could lead to more responsible lending, but it did not accept that better risk assessment would automatically follow. It also felt that part of the rationale for the push for comprehensive reporting was to create efficiencies for the lenders and reduce their costs.The Veda survey also reported that 1.9 million Australians claimed that they