6 April 2020
Any Australian who is granted a six month deferral on loan repayments on their mortgage or other credit products, such as a credit card, will not have their credit rating affected as a result of that deferral, provided they were up to date with repayments prior to COVID-19.
The industry has agreed a new approach to credit reporting through the COVID-19 crisis to relieve stress for Australian customers.
Australian Banking Association CEO, Anna Bligh said that banks had worked hard to ensure that when repayment deferrals are granted to customers impacted by COVID-19, credit reporting is conducted in a consistent and fair manner.
“Australia’s banks are here to support customers who have lost their jobs or significantly lost income because of COVID-19, through initiatives such as offering a six month deferral on mortgage repayments. Customers in these circumstances should not have to worry about their credit rating as well,”
ABA CEO Anna Bligh
“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,” Ms Bligh said.
“Australia’s banks are here to support customers who have lost their jobs or significantly lost income because of COVID-19, through initiatives such as offering a six month deferral on mortgage repayments. Customers in these circumstances should not have to worry about their credit rating as well,” she said.
For those customers who are already behind in repayments when they are granted a deferral due to COVID-19, banks will not report the repayment history information, and leave the field blank for the duration of the deferral period. When the COVID-19 repayment deferral period has ended, banks will determine how to report the repayment history information.
“There may be other factors which can affect a customer’s credit rating, but customers accepting a COVID-19 loan repayment deferral can rest easy that the deferral will not be one of them,” Ms Bligh said.
“If you are in need of assistance it’s important you contact your bank as soon as possible, with your first port of call being the website or the smart phone app due to the very high volume of calls coming into call centres,” she said.
Financial Rights Centre CEO, Karen Cox said “People calling our advice services have so much to contend with right now: the stress of not being able to pay their bills, fears for their own health, and fears for loved ones. They should not have to worry about their ability to access credit when this is all over.”
“We warmly welcome the ABA’s announcement that their customer’s credit reports will be quarantined from the impact of this crisis and we call on the rest of the finance industry to follow suit,” she said.
ENDS
Contact: Rory Grant 0475 741 007
Latest news
The ABA welcomes APRA’s proposals to make the internal ratings-based (IRB) accreditation process simpler and more transparent, giving mid-sized banks a competitive boost. ABA CEO Simon Birmingham said the changes would support competition and deliver better outcomes for customers. “This is a practical and sensible pro‑competition step from APRA,” Mr Birmingham said. “When fully implemented,… Read more »
E&OEInterview on Sky News with Cheng Lei Cheng Lei: Australian banks closed 155 branches over the last year, but the rate of closures has slowed. For the implications, let’s bring in Australian Banking Association Chief Executive and former Liberal Minister Simon Birmingham. Mr Birmingham, welcome to the show – great to talk to you in… Read more »
Australian banks welcome the Federal Government’s release of an updated Regulatory Initiatives Grid, helping to ensure there is more transparency and coordination when new financial rules are introduced. The ABA particularly welcomes new principles that streamline coordination between regulators, reducing duplication and regulatory burden across the industry. ABA CEO Simon Birmingham said the Grid was… Read more »