The Australian Information Commissioner has approved variations to the Credit Reporting Code ahead of changes to the credit reporting regime in July that will introduce reporting of financial hardship arrangements.

Beginning on 1 July 2022, credit providers are permitted to disclose financial hardship information to credit reporting bodies.

If a credit provider is disclosing repayment history information to a credit reporting body and financial hardship information is available, the provider is also required to disclose the financial hardship information corresponding to the same month’s repayment history information.

Credit reporting bodies are permitted to collect, use, disclose and retain financial hardship information.

A financial hardship arrangement is defined as an agreement that defers or reduces the obligations of a debtor for a temporary period.

The controversial change, which was part of an amendment to the National Consumer Credit Protection Act last year, was made to give credit providers a fuller picture of a consumer’s financial situation.

Disclosure of financial hardship information will be unrestricted in situations where a consumer is seeking to access new credit. 

Its availability will be more limited in other situations, such as where a credit provider is seeking to collect payments that are overdue, a mortgage insurer is doing a risk assessment or a credit provider is assessing a loan guarantor.

Hardship information cannot be used in calculating an individual’s credit score. 

The Information Commissioner said the variations to the Credit Reporting Code, which were submitted by the Australian Retail Credit Association, are designed to ensure consistency in the collection, use and disclosure of financial hardship information.

The new law will also allow consumers to access their credit reporting information that is held by a credit reporting body free of charge every three months. Under the current rule a consumer could get their credit report free of charge every 12 months.