Friday 14 October 2005
Credit reporting system denies New Zealanders wealth
International expert on New Zealand's credit reporting system
Thousands of people are potentially denied access to the New Zealand dream of home ownership, while many others are
provided access to credit they can't afford because of the country's restricted consumer credit reporting system.
These are the findings of international research presented today by Dr Michael Turner (PhD) from the Information Policy
Institute in the United States, at an American Chamber of Commerce business lunch at the Stamford Hotel, Auckland.
International data shows that New Zealand would see a decrease in default rates and an increase in participation rates
for demographics currently under-served, if legislators allowed even a small amount of additional information to be
placed on a consumer's credit report. New Zealand is currently one of only three countries in the developed world that
continues to operate on a negative reporting system.
This reporting system means that when assessing a credit application, a potential lender can only determine whether the
applicant has lodged any other credit requests and whether the applicant has been delinquent on any payments in the last
five to seven years. New Zealand legislation prohibits positive data on credit reports, such as account balances and
timely payment history.
Dun & Bradstreet, a leading Australasian credit reporting agency, believes that some additional positive information, such as
whether credit applications have been approved, should be allowed on credit reports and is seeking a Parliamentary
Inquiry into the matter.
Dr Turner says that while arguments opposing reform are generally unproven, the data supporting the case for reform is
substantial. That data includes:
- Dramatic reductions in delinquency and default rates
- Improved access to credit for those currently under-served - e.g. small business, young people with good payment
histories, and women
- Macro-economic benefits such as less overall risk within the financial sector and a contribution to the national
economy worth $5.3 billion over the next decade
"The international research is overwhelming. There are very real benefits to countries, developed and developing, from
improving and reforming credit reporting systems and providing creditors with the necessary information with which to
make responsible lending decisions," said Dr Turner.
David Christiansen, General Manager of D New Zealand, believes that the international experience shows that it is now time for New Zealand legislators to
seriously examine this issue.
"D believes the case for reform is overwhelming. A decrease in default rates, improved access for people under-served and
strong benefits to the nation's bottom line are all clear outcomes from a reformed credit reporting system," Mr
"But we also acknowledge that there are some groups that still want to be convinced. We believe the best way to bring
all the arguments together, and test them, is through a parliamentary inquiry." The speaking tour includes Sydney,
Melbourne, Canberra, Brisbane and Auckland.
About D D is the world's leading provider of business-to-business credit, marketing and purchasing information, as well as
receivables management services. In 2002, D opened a consumer credit bureau in Australia, introducing competition for the first time in this market. D is committed to providing Australia's most accurate and up-to-date consumer credit reporting solution. In addition, the
company is committed to engaging decision-makers on the key issues underlying consumer credit reporting, including the
criteria on which the industry makes credit available to consumers and the level of accountability in that system.
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