In an interview with Alan Jones on 2GB on 26 March 2014,
Attorney General George Brandis announced that the time after which
late payments could be reported to Credit Reporting Bodies under
the provisions of the Credit Reporting Privacy Code (CR CODE)will
be extended from five days to 14 days.
The Attorney General acknowledged and thanked Alan Jones for his
contribution in raising the issue. The
transcript of the conversation reveals:
"Now when you raised this matter with me, the week
before last Alan, the relevance of the five days was that was
called the period of grace. In other words if a payment was due,
let us say for arguments sake, on the 10th of April and it
wasn't paid for five days beyond that then it was treated in
the credit history of having been late. Five days, for all the
reasons we discussed the week before last, does seem a ludicrously
short period of time to treat a late payment as being late even
though technically it is. So my office has been in discussion with
the industry, with the Australian Retail Credit Association, and
we're very confident that they will agree now to extend that
period of grace, that is the period within which a late payment is
not treated as late from five days to 14 days. Now that is in fact
what at the time these rules had been developed last year the
consumer association themselves asked for. So this is a win and
I'm grateful to you, Alan, for drawing it to my attention and
raising it because as a result of that interview we did the week
before last that we've had this change".
Attorney General George Brandis
That means that clause 8.1 of the CR Code will be amended to
replace five days with 14 days (see below). It is certainly true
that in some circumstances a payment that is only five days late
can be reported to a Credit Reporting Body. However, that is not
always the case – five days is the minimum timeframe.
The reason why five days is the minimum timeframe arises because
of the way the CR Code is drafted.
We have extracted clause 8.1 of the CR Code below. You will
notice that a missed (late) payment can only be reported at five
days overdue on the last day of the month in which the payment
So, if at the end of a month a payment is only four days
overdue, you cannot report that payment as "missed" at
the start of the next month. You must wait until the first day of
the month after that. In the example given it will be 34 days after
the payment became due before the late payment can be reported to a
credit reporting body.
8.1 For the purposes of this paragraph and the definition of
repayment history information in Section 6V of the
consumer credit is overdue if, on the last
day of the month to which the repayment
history information relates, there was at least one
overdue payment in relation to which the grace period has expired;
the grace period allowed by the CP for an overdue payment
must be at least 5 days, beginning on the date that the CP's
systems first classified the payment as being in arrears.
Explanatory Memorandum p.129-130
Our concern with the proposed change is that unless the CR Code
is further amended, a payment can be somewhere between 14 days and
43 days late before it is reported as a "missed" payment.
This is especially so given the fact that "default
information" can be reported after 60 days and it is clear
that a missed or late payment is not about a default situation.
This change will reduce the usefulness and effectiveness of the
"positive credit reporting" data credit providers hope to
input into the credit reporting system.
This problem could be solved if the CR Code was amended to allow
reporting of a payment which is 14 days late and abandon the
concept presently in the CR Code about payments being "overdue
on the last day of a month" and the "grace period"
It will be interesting to see if the Privacy Commissioner (the
OAIC) will allow the CR Code to be amended in the manner sought by
the Attorney General and what if any conditions will be imposed. It
is not a given that this will happen.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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