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Non-payment of council rates should no longer appear as a black mark on an individual’s credit file, according to a law firm.
MyCRA Lawyers has flagged a legislation change that came into effect on 14 February, which meant that civil court filings should no longer appear on people’s credit files, with the law change also retrospective.
Traditionally, people who didn’t pay council rates were sued by their respective council in a civil case, with this action being marked on that person’s credit file.
This means anyone who has been called before the court in the past five years should now have a clean(er) slate.
The only exception is where there has been a court judgment and that court judgment was specifically credit-related, according to MyCRA Lawyers.
But, according to the firm’s CEO, Graham Doessel, council rates are an area of contention among Australia’s three credit reporting bodies.
“We say council rates are not ‘credit’ because, for one thing, you don’t enter into a contract with the council to pay them, you just have to pay them,” he argued.
“Equifax agrees and has removed these, but CRB Illion has taken a cynical view of the law changes,” the CEO outlined.
He noted that CRB Illion is arguing councils are credit providers “because normally people pay their rates six weeks into the rated billing period, which Illion claims means councils across the country fall under the definition of a credit provider”.
From Mr Doessel’s perspective, “this a brave interpretation” and he said MyCRA Lawyers has raised this with Illion, who responded that they will still be following that line.
“Based on a technicality, Illion is being cute and taking a ‘so sue me’ approach to the law changes,” the CEO continued.
“Our fear is that in no time, other CRBs may take a similar view as Illion because the more information on a credit file, the more valuable it is.”
To clear up the confusion, the CEO said MyCRA Lawyers is calling on the privacy commissioner to get involved and clarify exactly what the legislation was meant to do.
“The change in legislation should have allowed people to get credit where previously they were rejected or negotiate lower interest rates,” he commented.
“We know brokers have been frustrated for years as clients had their bank funding cut off or rejected because of trivial and vexatious civil court actions that judged them guilty till proven innocent when it came to creditworthiness regardless of the type matter before the court.”
Limiting reporting to only credit-related judgments should have cleared up a lot of problems in one go, the CEO conceded.