Recently Veda Advantage made the controversial decision to stop removing court judgment listings, even when they have been discontinued with the court. When I first heard this news I didn’t believe it. How could it be possible for a court judgment to remain on a credit file even after the plaintiff had agreed to formally discontinue the action?
Refusing to accept this I called Veda and questioned what I thought must have been a misunderstanding. To my amazement I was informed that they had made the decision not to remove court judgment listings after they have been discontinued, instead they will update the status of the listing only. In other words a court judgment will be recorded for a period of five years even if the matter has been set-aside by the court. I’m not often lost for words but in this case I was unsure how to respond, other than to express my displeasure.
Veda has done a tremendous amount of work improving credit reporting over the last few years, most notably being the introduction of positive reporting. I’m in favour of the majority of these changes and have openly applauded Veda for their efforts towards a fairer reporting platform. However the decision not to remove a court judgment from a credit file after the action has been discontinued seems like a step in the wrong direction.
Discontinuance of Bad Credit on Court Judgement Listing
Let me quickly cover how things used to work. If a court judgment was found to be incorrect, the plaintiff could agree to have the matter set-aside with the court. This process involved the plaintiff signing a Notice of Discontinuance and filing it with the court. In most cases the court would consent to the judgment being closed and they would produce an order reflecting this. The order would then be provided to Veda who would in turn remove the judgment listing from the credit file.
This seemed fair to me as it is critical that only accurate data is recorded in a credit file. Once a judgment has been set-aside the listing is no longer an accurate record of events and therefore should not be recorded. To continue to list the judgment after it has been set-aside could mean that misleading information is being recorded and credit providers may be applying an incorrect risk profile to applicants.
I believe the reason Veda has made this decision is due to the fact they feel some court judgments were being set aside solely on the basis that the debt had been resolved and to remove a listing just because a debt was no longer outstanding, may inappropriately improve a person’s risk profile, potentially misleading a credit provider. I understand this and agree that a negative credit listing should not be removed based solely on payment.
My concern is court judgments that are entered against people wrongly. While you may think this situation is rare I can assure you it happens regularly. It’s not uncommon for someone to commence legal proceedings for a debt that is not valid. This can happen for a number of reasons including incorrect information from an accounts department or even vindictive or revengeful behaviour from the plaintiff. The bottom line is just because there has been a court judgment recorded does not automatically mean it is correct.
It’s quite common for people not to receive a Statement of Claim and a judgment be awarded against them without them even knowing. Often it’s not until they apply for credit that they are informed they have a court judgment recorded on their credit file.
Most people don’t understand the legal system and if they do receive a Statement of Claim for a debt they know is incorrect, they will often throw it away in disgust. What they don’t realise is that their inaction will lead to the plaintiff often being awarded judgment, even if the debt was never valid.
The point is not all Court Judgments are a true record that monies were owed and unpaid and it’s these cases that warrant Veda’s attention. Veda will record a court judgment for a five year period. Fair enough if the judgment was an accurate record of events, but definitely not fair if the judgment should have never been awarded. If it was found that a court judgment was wrongly awarded, the normal legal remedy would be to have the matter discontinued and set-aside with the courts. It would seem a travesty of justice if in these circumstances people had to continue to suffer due to an inaccurate credit listing, even when they have proved their innocence in a court of law.
This recent change by Veda is essentially throwing everyone in the same basket and treats everyone as guilty when in reality this is not the case. Veda no doubt considered this decision carefully and would not have implemented this unless they thought it was the correct approach, however I wonder how the people who made this decision would feel if they had a court judgment wrongly awarded against them and they were not able to secure credit for up the five years due to an inappropriate credit listing. Would such an event promote this decision to be revisited?
I’m sure Veda would acknowledge the current credit reporting platform is not perfect and I acknowledge it is very hard to develop a “one size fits all” approach without some situations falling between the cracks. My belief is that Veda has done a great job in addressing issues with the credit reporting system and has made many positive changes however, I feel they need to reconsider their stance on this subject and at least provide a mechanism to allow for the removal of court judgment listings that should have never been awarded in the first place.
Clean Credit Pty Ltd