• Credit providers
• Am I a credit provider?
• How does the law affect agents of credit providers?
• What are credit providers required to do under the law?

Credit reporting

Credit providers

Under the provisions of Part IIIA of the Privacy Act, credit reporting agencies can generally only give access to personal credit information about individuals to businesses that are credit providers (as defined by the Privacy Act 1988). Credit providers are also subject to rules governing the handling of consumer credit information and cannot generally disclose consumer credit information except in the circumstances described in the legislation. It is therefore important for you to know whether your business is a credit provider and how the Act affects your business.

The legislation imposes heavy penalties for unauthorised access to, or improper use of, personal credit information.

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Am I a credit provider?

Under section 11B of the Act, finance organisations such as banks, building societies, credit unions and retail businesses which issue credit cards are automatically classed as credit providers. A person doing tasks reasonably necessary for purchasing, funding or managing, or processing an application for a loan through a securitisation arrangement is also a credit provider. Many other businesses are also credit providers for the purposes of the Act where loans are provided in ways described by the legislation.

You are a credit provider if you operate a business and a substantial part of the business is providing loans. You are providing a loan if you let someone have goods or services and permit payment of such goods or services to be deferred. The following are all examples of loans:

• a hire-purchase agreement;
• any arrangement where a customer receives goods or services and then has to pay for them within a specified time;
• an arrangement where goods are hired to a customer, unless an amount greater than or equal to the value of the goods is paid as a deposit for the return of the goods. Examples of hire arrangements covered by the Act include most car or equipment rentals and the hiring of videos and games even if the hire fee is paid in advance.

Even if providing loans is not a substantial part of your business, the Privacy Commissioner has issued two determinations that could declare you to be a credit provider for the purposes of the Act.

• If you make a loan to a customer, and allow him or her to defer payment for 7 days or more, then you are a credit provider for the purposes the Act, but only in relation to that transaction (the 7 day period is counted from the day on which the loan is provided). As a credit provider you can obtain and use a consumer credit report from a credit reporting agency, or consumer references from other credit providers, in relation to the particular credit transaction. The law is very specific about how credit providers may use information obtained from a credit reporting agency or other credit providers.
• If you are a corporation that has acquired the rights of a credit provider with respect to the repayment of a loan (whether by assignment, subrogation or other means) you are a credit provider for the purposes of that loan.

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How does the law affect agents of credit providers?

Under the law, if a credit provider appoints an agent to carry out some of its functions in relation to assessing a loan application or managing a loan, the agent has the same access to credit information and responsibilities as the principal credit provider, but only in relation to the performance of those functions. This does not apply if the agent's function is to collect overdue payments on behalf of the credit provider. In other words, a debt collector is prohibited from gaining direct access to personal credit information kept by a credit reporting agency or another credit provider, when acting as an agent of a credit provider for the purpose of collecting overdue payments.

Some typical examples of credit provider agency arrangements include:

• building societies and retailers which have an agency arrangement whereby the agents receive loan applications on behalf of the building societies or retailers such as motor vehicle retailers; or
• legal advisers who are contracted to a credit provider (on an occasional or 'as needed' basis) to provide advice to a credit provider in relation to a loan or who undertakes legal action in relation to a loan
• legal advisers who draw up loan documentation (such as mortgage papers) on behalf of a credit provider.

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What are credit providers required to do under the law?

The obligations of credit providers are described in the Act, and in greater detail in the Code of Conduct and the Explanatory Notes to the Code of Conduct issued by the Privacy Commissioner. The Code deals with matters such as:

• notifying the individual of the items that will be disclosed to a credit reporting agency;
• obtaining access to a credit report issued by a credit reporting agency;
• issuing notices to an individual when credit is refused;
• disclosing information about individuals to a credit reporting agency;
• reporting overdue payments;
• disclosing information to debt collection agents;
• reporting serious credit infringements; and
• disclosing information to other credit providers.

Credit providers also have obligations dealing with access and amendments rights of consumers, and ensuring that information on a credit file is accurate, up-to-date, complete and not misleading. Credit providers must ensure that the file or report is protected through adequate security measures against loss, unauthorised access, modification, disclosure or other misuse.

Please contact us for more information.

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