February 24 2003

The Deputy Federal Privacy Commissioner, Timothy Pilgrim, today announced the gazettal of the Privacy Commissioner''s credit determination:

Determination 2003 No 1 Privacy Act 1988, s.11B(1)(b)(v)(B) - Concerning Classes of Credit Providers

This determination will be in effect for three years.

"There is no change in the determination" said Mr Pilgrim. "Our Office believes it remains an effective instrument that meets the appropriate balance of protecting privacy, while enabling business to continue arrangements for the effective provision of credit services to consumers. Determinations are strong regulatory tools, and industry has been working to this determination for a decade."

Mr Pilgrim advised that "The effect of the determination is to clarify the types of organisations that can gain access to the credit reporting system in order to receive credit reports. This means that when these organisations are considering providing credit they can access information on the credit reporting system to help inform their decision."

"The Commissioner sought input on the review of the Determination from industry and consumer representatives and other regulators" said Mr Pilgrim. "The Office talked with a range of stakeholders, issued a consultation paper, and sought submissions on the determination."

"Consultation on the operation of the Determination, and our own research into enquiries and complaints from individuals to our Office and to other regulators, demonstrated that on balance it remains appropriate. This is supported by the lack of an increase in the number of complaints relating to organisations using the credit reporting system under this Determination, despite a substantial increase in the use of credit in the Australian community", said Mr Pilgrim.

"In light of our consultations and research, the Office believes that while the wording of the Determination is appropriate, there may be some emerging compliance issues within some organisations brought in by the Determination, particularly regarding the requirement to notify consumers that they will be listed by a credit reporting agency. Such businesses should take this as early warning to make sure they are complying with the Act'', said Mr Pilgrim.

Mr Pilgrim noted that "Without this determination, it is our belief that individuals' access to credit, and goods and services received under credit arrangements may be limited, as organisations may put other mechanisms in place to protect themselves from financial risk."

Mr Pilgrim warned that "While this determination remains appropriate, it is very important that Credit Providers and Credit Reporting Agencies fulfil their obligations under the Privacy Act and the Determination if they are to receive the benefits of the Credit Reporting System. Given the length of time the Determination has been in place, the Commissioner expects a high level of compliance, and where poor compliance is found, strong measures can be anticipated."

Mr Pilgrim also noted that the Commissioner was presenting the Determination 2003 No 2 Privacy Act 1988, s.11B(1)(b)(v)(B) - Concerning Assignees for gazettal unchanged. "This determination has been operating effectively, and it will continue to apply" he said.

"The effect of the determination is to allow, for example, an organisation that takes over loans or credit arrangements from a retailer where these were previously agreed between that retailer and their customers, to access consumer credit reports and credit information in relation to those credit arrangements'' said Mr Pilgrim.

"The Office does have some concerns in relation to a particular compliance issue that may be affected by the coverage established by this determination. On occasion, a consumer''s non-payment of a debt is listed with a credit reporting agency, and when that debt is taken over by another organisation, the debt is effectively re-listed with the same or another credit reporting agency. This is not permitted by the Act. Consumers are disadvantaged by this practice, as it can result in an individual having the one debt listed in the credit reporting system for longer than the permitted five year period'' said Mr Pilgrim.

"Businesses 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. Failure to address this problem may well result in this Office undertaking stronger regulatory compliance activity or indeed, lead to changes to the regulatory framework to ensure greater oversight. "The Commissioner will be monitoring industry compliance in this area closely" warned Mr Pilgrim.