Senate report on proposed new credit reporting provisions

The Senate Committee has handed down its report on the Credit Reporting Exposure Draft Bill. The Draft Bill is the second of four parts of the Government's first stage response to the Australian Law Reform Commission's (ALRC's) recommendations for the reform of Australian privacy laws. Once the Senate Committee has reported on all four parts and any recommendations are taken into account, all parts will be consolidated to comprise a new Privacy Act. The remaining parts relate to health information and to the functions and powers of the Australian Information Commissioner.

Background

The current credit reporting provisions in the Privacy Act 1988 regulate the collection, use and disclosure of personal information concerning credit that is intended to be used wholly or primarily for domestic, family or household purposes. (Commercial credit information is only covered in limited exceptional circumstances). They apply to individuals whose personal information is contained in a credit information file, credit reporting agencies, credit providers and persons providing third party personal information to credit reporting agencies. Credit providers include not only banks and entities which provide loans or issue credit cards but also any entity which makes a loan to a customer and allows that customer to defer payment for 7 days or more.

The reforms proposed under the Exposure Draft provide for a more comprehensive credit reporting regime and include the addition of five new data sets. These new data sets greatly expand the amount of credit information that will be permitted to be collected, used and disclosed.  The credit reporting provisions will also apply to a wider range of credit reporting agencies and credit providers.

Recommendations

The Senate Committee makes thirty recommendations in its Report. These recommendations relate to improvements about the clarity of the Exposure Draft, simplification of key definitions and the need for consistency across the consumer credit regulatory regime. They also cover issues such as serious credit infringements, identity theft, hardship provisions and complaints handling.

Some of the key recommendations made by the Senate Committee are:

• all relevant requirements of the new Australian Privacy Principles (which will replace the National Privacy Principles and Information Privacy Principles) for both credit reporting agencies and credit providers as well as specific requirements for credit reporting be incorporated in the Exposure Draft;
• consideration be given to the conduct of a regular audit of a randomly selected credit reporting agency and credit provider by the Australian Information Commissioner;
• consideration be given to a change of approach in dealing with serious credit infringements to allow for listings for serious credit infringements which do not relate to intentional fraud to be dealt with in a different manner. (For example, listings relating to non-payment of utilities and telecommunications debts where the non-payment is due to an individual inadvertently failing to provide a change of address notification);
• the Exposure Draft be reviewed to ensure that credit reporting agencies must advise a credit provider if the credit reporting agency is unable to release an individual's information because the individual believes it is the victim of fraud (with the initial ban period for releasing an individual's information increased from 14 to 21 days);
• hardship flags were not supported but consideration be given to allowing changes to credit arrangements requested by an individual because of a change of circumstances (for example, an illness) prior to a default by the individual of the credit arrangement, be included as part of an individual's credit information;
• further consideration be given to the regulation of credit eligibility information provided by credit providers to debt collectors that are small business operators;
• consideration be given to including in the Exposure Draft certain consumer remedies for consumers affected by a breach of the credit reporting provisions (for example, compensation).

Other components of the reform framework

Despite concerns in relation to the complexity of the Exposure Draft it is expected that the majority of matters which require clarification will be addressed by either the Explanatory Memorandum, the new Credit Reporting Code of Conduct (which is currently being developed in consultation with stakeholders) or in guidance from the Office of the Australian Information Commissioner.