The banking industry has implemented new changes to consumer credit reporting to give more relief to customers affected by the COVID-19 pandemic.
The Australian Banking Association (ABA) has announced its member banks will not file a missed payment or hardship report with a credit bureau for customers who are granted a six month deferral on loan repayments.
This applies to repayment deferrals on mortgages, credit cards and personal loans provided they were up to date with repayments prior to COVID-19.
ABA chief executive Anna Bligh says: “If a customer is granted a deferral on their mortgage and other credit products because of COVID-19, banks will report customers as not having missed a repayment, provided they were all up to date when granted relief.”
For customers who are already behind with their repayments when they are granted a deferral due to COVID-19, the new approach prescribes that banks will not report any repayment history information for the duration of the deferral period.
“When the deferral payment period has ended, banks will then determine how to report the repayment history information,” the ABA says.
Commonwealth Bank already implemented measures to help its customers last week, offering payments to support customers who have been granted a six month deferral to offset interest costs.
For credit customers who have missed their minimum repayment in March, CBA will refund late fees and interest for the month.
NAB has announced it will waive late payment fees and reduce minimum monthly payments on all credit cards for at least the next three months.
Its personal loan customers can also request a reduction in their minimum repayments to $100 a month for up to 6 months on an opt-in basis from April 17.
It is unclear whether this approach will be implemented outside of ABA member banks. But the Consumer Action Law Centre urges other credit providers to follow the banks’ example.
Consumer Action Law Centre chief executive Gerard Brody says: “It’s important now that all lenders, including non-bank lenders and other finance companies, similarly commit to ensuring people’s credit reports are not negatively affected at this time.”
Despite these measures being temporary, there are calls hardship programs to remain off consumer credit reports permanently.
Fiona Guthrie, chief executive of Financial Counselling Australia says: “People are put off asking for hardship variations if they know it will hurt their credit report. No one chooses to experience financial hardship. When it happens we shouldn’t be punished for it.”