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Credit checking plans could see closer scrutiny of finances

Date Published : Monday, July 21, 2008

Banks could receive "far greater powers" to probe Australians' personal finances under proposals that would allow wider access to consumers' mortgage, credit card and loan repayment histories, it has been reported.

According to the Age, the move comes after bankruptcies hit a decade-long high in June and figures from the Reserve Bank showed record levels of bad debts.

The legislation is also being proposed after a report from the Australian Law Reform Commission (ALRC) "strongly recommended" that lenders be given the right to view current credit balances and limits, as well as calling for them to be "regularly updated" on payment histories and the opening or closing of accounts.

With climbing fuel, food and energy prices hitting many Australians' bank accounts, while high interest rates push repayments upwards, a government source told the publication that Prime Minister Kevin Rudd is "keen" to see the adoption of the changes fast-tracked into law.

Previous attempts at such legislation have stalled over concerns about civil liberties and privacy, the site said, but some experts now believe economic conditions demand closer scrutiny of potential borrowers' finances.

Christine Christian, chief executive of credit checking firm Dun & Bradstree, told the site: "There's no doubt that a lot of people who have got themselves into trouble with personal debt or credit cards wouldn't have been given loans or more cards by institutions if [lenders] had access to more detailed financial records."

Meanwhile, Martin North of Fujitsu Consulting, said the ACLR's proposals should be adopted in order to boost economic stability.

He added that a more open checking system could also have benefits for consumers, as it would allow them to examine banks' files on them and correct any omissions or errors.

According to Dollars and Sense, the average Australian has personal debts of $32,500.

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