• In what circumstances do credit providers need to get a customer's agreement to their obtaining or disclosing credit information about the customer?
• Does the customer's agreement have to be in writing?
• Is there a particular form of words that has to be used when obtaining agreement?

In what circumstances do credit providers need to get a customer's agreement to their obtaining or disclosing credit information about the customer?

Part IIIA of the Privacy Act specifies a number of circumstances in which credit providers need the customer's agreement before they obtain or disclose credit information about the customer. Some of these circumstances only arise in relation to the granting of commercial credit, some only arise in relation to consumer credit, while some can arise in relation to both.

The agreements with credit applicants which are required by the Privacy Act relate to activities engaged in by:

credit providers when:

• assessing applications for consumer credit
• assessing applications for commercial credit
• assessing the credit worthiness of a guarantor in connection with another individual's application for credit
• disclosing information to a potential or existing guarantor
• collecting overdue payments in respect of commercial credit
• exchanging references with other credit providers about an individual's credit worthiness.

trade insurers when:

• using a consumer credit report to assess the provision of insurance to a credit provider in respect of commercial credit given by a credit provider to an individual.

Credit providers should make sure they obtain the appropriate agreements for those exchanges of credit information that may be required in assessing and managing each loan application.

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Does the customer's agreement have to be in writing?

Generally, the individual's agreement does have to be in writing. Agreement can be oral in the first instance if credit information is to be disclosed or obtained in relation to assessing an application for credit that was initially made orally and has not yet been made in writing, for example a telephone application. However, once the application has been made in writing, the written agreement must also be obtained to enable any subsequent disclosures to be made.

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Is there a particular form of words that has to be used when obtaining agreement?

The Explanatory Notes accompanying the Code of Conduct for credit reporting, as issued by the Privacy Commissioner, include recommended wordings for each type of agreement. They are summarised below.

1. Applications for consumer credit

Use of commercial credit information for a consumer credit application

A credit provider needs to obtain an individual's written agreement before using information about an individual's commercial credit worthiness obtained from a commercial credit reporting agency in order to assess an application for consumer credit (Explanatory Notes para. 36(a)).

Exchange of credit worthiness information with another credit provider

A credit provider that wishes to obtain a credit reference from another credit provider must obtain the individual's specific written consent for that particular purpose. If the application is made orally, the agreement can also be oral in the first instance (Explanatory Notes para. 36(f)).

2. Applications for commercial credit

Obtaining a consumer credit report about the applicant

If a credit provider wishes to obtain a consumer credit report from a credit reporting agency about an applicant for commercial credit, it needs the applicant's specific agreement (Explanatory Notes para. 36(b)). If an oral application is made, the agreement may also initially be oral.

Obtaining a consumer credit report in relation to overdue payments

After 25 February 1992, a credit provider that wishes to obtain a consumer credit report from a credit reporting agency in order to collect overdue payments in respect of a commercial loan from an individual, can only do so if the individual gives specific written agreement for this purpose, or had given agreement at the time of application to a report being used for loan assessment purposes (Explanatory Notes para. 36(e)).

For commercial credit granted before 25 February 1992, no agreement, either oral or in writing, is required.

Consumer credit report being obtained by a trade insurer

Before a trade insurer can obtain from a credit reporting agency a consumer credit report on an applicant for commercial credit, specific written agreement from the applicant must be obtained (Explanatory Notes para. 36(g)).

3. Applications for either commercial or consumer credit

Collection of overdue payments for commercial credit

Before a credit provider discloses to another credit provider any personal credit information of a type described under s.18N(9) of the Act about an individual in order facilitate debt collection, the credit providers must obtain the individual's specific written agreement (Explanatory Notes para. 36(e)).

Obtaining a consumer report about a prospective guarantor

If a credit provider wishes to obtain a consumer credit report from a credit reporting agency about an individual for the purpose of assessing whether to accept the individual as a guarantor, it needs the individual's specific agreement (Explanatory Notes para. 36(c)).

Disclosing information to a potential or existing guarantor

A credit provider must obtain an individual's specific written agreement in order to disclose information to a person acting as guarantor or who has provided property as security for a loan (Explanatory Notes para. 36(d)).

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