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Six years after the law change permitting comprehensive credit reporting in New Zealand, the full benefits for individuals and communities are yet to be felt, according to a new report from the Office of the Privacy Commissioner.

“The privacy intrusion inherent in comprehensive credit reporting is justified only if it delivers public benefits to individuals, communities and the economy generally; it is not enough simply to contribute to the profits of lenders,” Privacy Commissioner John Edwards said.

The Privacy Commissioner’s Comprehensive Credit Reporting Six Years On report has been released following an 18 month review.

“We have not seen compelling evidence yet of the wider benefits that should flow from comprehensive credit reporting such as enhanced competition, risk-based credit offerings and a greater willingness of mainstream lenders to lend to previously underserved communities,” Mr Edwards said.

“It is disappointing to find that the credit industry has not fully embraced provisions allowed for in the Credit Reporting Privacy Code that would support responsible lending.  

“It is also of concern that credit providers have not  implemented arrangements for ‘quotation enquiry’ credit checks which were allowed for six years ago and instead the industry continues in credit scoring practices that have the potential to penalise consumers who shop around for a good credit deal.

“On a more positive note, after a prolonged period of implementation, New Zealand appears to be poised in 2018 to achieve a high voluntary participation rate with only one of the major banks to come on board.

“Comprehensive credit reporting provides the tools for lenders both to reward good risk borrowers and to be more forgiving of borrowers who have, notwithstanding past defaults, demonstrated a reliable pattern of making payments. I look forward to seeing evidence of these innovations as the system matures.”

The Privacy Commissioner has made 13 recommendations which seek to ensure that the public benefits of comprehensive credit reporting are delivered as the system matures.

Notes for editors

The Credit Reporting Privacy Code 2004 was substantially amended in 2010-11 to authorise a US-style comprehensive credit reporting system. This was a major change from previous New Zealand practice and accordingly a review was scheduled to be undertaken after 2015 to provide assurance that the system was operating well and delivering the expected benefits.

The report Comprehensive Credit Reporting Six Years On: Review of the Operation of Amendments No 4 and No 5 to the Credit Reporting Privacy Code is available on the Office of the Privacy Commissioner website.

The Office has also created a document about next steps after this review: Where to from here with the Review recommendations?

For more information, contact Sam Williams - 021 959 050.