Fee fuels debt list boycott

By GREGG WYCHERLEY

The credit industry has been hit by a dispute between Baycorp and other debt collection agencies over the use of its database.

The dispute means companies could be giving credit to people regarded as bad risks.

Some debt collection agencies are refusing to lodge notices of debt defaults on the database since Baycorp introduced a $5 charge on November 1.

But Baycorp says those notices make up only a small part of its database.

The industry group Associated Credit Bureau said early results from a poll of its members showed about 2000 defaults a month were not being listed.

Bureau president Keith Goodall said the numbers could go much higher when more members responded.

He said the outlook was serious for trading banks, credit managers, finance companies or anyone who gave credit, because lenders could be approving loans to people who later turned out to be bad risks.

Mr Goodall said the charge was an abuse of Baycorp's monopoly position.

Other debt collection agencies wanted the $5 charge dropped before the industry splintered into factions.

South Auckland company Law Debt Collection filed a complaint with the Commerce Commission in November.

Director John Campbell said the company had about 16,000 unlisted default notices.

He said Baycorp's credit reporting integrity relied on information received from other debt collection agencies and to charge for it was "ridiculous".

But Baycorp communications director Paul Stewart disputed those figures, saying debt collection agencies lodged only 30,800 of the total 117,000 debt defaults lodged last financial year.

He said Baycorp was not concerned about losing the debt defaults lodged by debt collection companies because they made up a relatively small part of the total information on the database.

The charge was introduced because debt collection agencies had been using the database to force debtors to pay, but not updating it once the debt was cleared.

"A substantial number of them were causing a major problem and we felt we had to do something about it."

Mr Campbell said maintenance of the database was a separate issue which Baycorp should pursue with agencies rather than applying a blanket charge.

"If a particular agency is causing problems you deal with that agency, not across the board - that would be a cop-out."

Mr Stewart conceded that Baycorp might have to look at a compromise solution.

"That may be an outcome that we arrive at ... what introducing the charge has done is to really highlight the issue. Perhaps it is bringing it to a head."

John Harrison, of East Coast Credit, said that since November he had been listing less than five per cent of new bad debts.

He now had about 2500 notices stacked up.

"I don't know of one agency in New Zealand which is giving them information.

"We give it to them for nothing and they charge a fortune for people accessing the information."

He believed Baycorp was in breach of the Fair Trading Act because it was no longer providing the up-to-date information it advertised.

"When people go into the Baycorp system now they are getting less than half the story."

Lynne Nodder, a credit manager at Carter Holt Harvey, said there was nothing in Baycorp's reports telling clients of the changes.

She was concerned that companies no longer had access to the same amount of information.

John Vague, an insolvency specialist at McDonald Vague and Partners, said the fact that Baycorp's debtor information had not been updated would make lenders more reluctant to give credit.

He was also concerned that neither he, nor anybody else he had spoken to, knew that Baycorp's system had changed.