This document has been archived and is no longer in use by the Office. A list of the Office's current Credit Provider Determinations is available on the Credit Reporting page - http://www.privacy.gov.au/act/credit/

Under s.11B(1)(b)(v)(B) of the Privacy Act 1988, I DETERMINE that:

1. A corporation which acquires the rights of a credit provider with respect to the repayment of a loan (whether by assignment, subrogation or other means) shall, in relation to that loan, be regarded as the credit provider for the purposes of the Act.

2. A corporation deemed to be a credit provider by virtue of paragraph 1, above, shall, for the purposes of the Act, be regarded as the credit provider to whom application for the loan was made, or who provided the loan.

3. This determination relates to those corporations which are not already credit providers by virtue of paragraphs (a) or (b)(i) to (v) of s. 11B(1) of the Act.

4. This determination represents a continuation of Determination No. 2 of 2002 which expires on 24 February 2003.

5. This determination shall take effect on 25 February 2003 and shall lapse, unless continued by a further determination of the Privacy Commissioner, on 24 February 2006.

MALCOLM CROMPTON Federal Privacy Commissioner

14 February 2003

DETERMINATION 2003 No. 2 UNDER s.11B(1)(b)(v)(B) ? CONCERNING ASSIGNEES: REASONS FOR DETERMINATION

Background

Determination No. 2 of 2003 represents a continuation, without amendment, of Determination No. 2 of 2002; this was effectively a continuation of Determination No. 1 of 1997, which was a continuation of Determination No. 1 of 1995.

History of the determination

In March 1993, the Privacy Commissioner received a request for a determination from a mortgage insurer for a determination under section 11B(1)(b)(v)(B) of the Act, to enable a corporation which acquires the rights of a credit provider with respect to the repayment of a loan to be regarded as a credit provider for the purposes of the Act. The request arose from concerns about the situation where a mortgage insurer takes assignment of a loan after the borrower defaults.

It was submitted that a mortgage insurer which takes assignment of a loan from a credit provider should thereafter be regarded as the credit provider in respect of that loan. This would entitle the mortgage insurer to obtain access to consumer credit reports and consumer credit information in relation to that loan, as if it had provided the loan in the first instance.

Before issuing the original determination, the then Privacy Commissioner undertook extensive consultation on the substance of the matter. Following consultation, it was felt that the determination should not be limited to mortgage insurers but should have a general application to businesses which acquire the rights of credit providers.

Further consultation on the determination was undertaken prior to the making of Determination No. 1 of 1997; during which peak industry bodies expressed strong support for its renewal. Correspondingly, no objections were raised by the Credit Reporting Consultative Group or other interested parties. In addition, the Office had not encountered problems in the operation of the original determination.

As noted in the Reasons for Determination No. 2 of 2002, the Office encountered no problems with the operation of Determination No. 1 of 1997. This has remained the case over the past year.

Operation of the determination

Resulting from the original consultation process, the decision was taken to issue a determination that a corporation which acquires the rights of a credit provider with respect to the repayment of a loan (whether by assignment, subrogation or other means) shall, in relation to that loan, be regarded as a credit provider for the purposes of the Privacy Act.

With regard to notices given and consents obtained by the credit provider under the terms of the loan, it was envisaged that these would be taken to have been given or obtained by a business deemed to be a credit provider by virtue of the determination.

As noted in the Reasons for Determination for the previous determinations, under section 11B(1)(b)(v)(A) one of the conditions which must be satisfied before the Privacy Commissioner can determine a class of corporations to be credit providers is that those corporations carry on a business or undertaking involving the provision of loans. As such, the determination does not extend, for example, to an agent that collects debts on behalf of a credit provider.

While the determination is directed to a certain class of corporations, the application of the determination is extended by virtue of section 11B(1)(c) to non corporations which meet the criteria which apply to corporations under section 11B(1)(b).

Current issues

During 2002 and early-2003, the Office engaged with various stakeholders in the credit reporting sector on a range of issues. This was foreshadowed in the Reasons for Determination for Determination No. 2 of 2002, namely that the Office would be further considering other issues relating to the credit reporting sector (including issues relating to Determination No. 1 of 2002), and then looking at whether these issues have a bearing on the current determination. This does not appear to be the case.

An issue that has been brought to the attention of the Office, however, is that of 'double listing', involving occasions where a consumer?s non-payment of a debt is listed with a credit reporting agency, whereafter that debt is taken over by another organisation/credit provider and the debt is effectively re-listed with a credit reporting agency. Such occurrences, which are not permitted by the Act, can result in an individual having the one debt listed in the credit reporting system for longer than the permitted five year period.

Businesses should regard this as an early indication that they need to review their practices in this area. At this stage, there is an opportunity for credit providers and credit reporting agencies to improve practice themselves, rather than requiring a move toward more regulatory compliance activity or legislative change that delivers greater oversight. This issue, however, clearly needs to be kept under notice, and is highlighted for further consideration on review of this determination.

Currently, I remain of the view that the operation of the determination continues to be appropriate.

Determination

In light of the issues considered above, in my view it is appropriate to issue a further determination, in unchanged terms, in respect to corporations acquiring loans by assignment, subrogation or other means and their relationship with the credit reporting system.

As to the life of the determination, I take the view that it should not be open-ended. I have therefore decided that the determination should be made for a period of 3 years commencing on 25 February 2003 and lapsing, unless continued by a further determination, on 24 February 2006.

MALCOLM CROMPTON Federal Privacy Commissioner

14 February 2003