Greenleaf, Graham --- "Credit Reporting Advice Summaries - Australian Privacy Commissioner" [1994] PrivLawPRpr 58; (1994) 1(4) Privacy Law & Policy Reporter 74

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Credit Reporting Advice Summaries - Australian Privacy Commissioner

Australian Privacy Commissioner - Federal Privacy Handbook, pp 1243 (Release 3, March 1994) - Privacy Act 1988 (Cth), Pt IIIA

The Privacy Commissioner has published over 100 pages of summaries of the written advices he has given to the credit industry and others about specific industry practices. Although these advices do not have any formal status under the Privacy Act, they constitute the unofficial ''lore' on which the industry relies, so it is very valuable to have them published and available to all. The advices have been carefully organised under eleven major subject headings and numerous subheadings, and indexed as well. If only the complaints investigated by the Commissioner were so comprehensively documented!

The following note indicates some of the main points of interest in the summaries, but is not comprehensive. References are to the paragraph numbers of the Advice Summaries.

Meaning of 'credit' and 'credit provider'

The word ''substantial' in the definition of ''credit provider' connotes both value and proportion, so a substantial amount of money lent may be sufficient even if it is not a dominant part of a corporation's business [1.4].

The following activities are not normally within the definition of ''loan': housing rental [1.7]; insurance agents' commission arrangements [1.10]; fidelity bonds [1.11]; overdrawn cheque accounts [1.12]; pawnbroker's ''loans' (no legal obligation to repay) [1.22]; hospitals that provide patients with accounts on discharge payable immediately [1.21]; and hotels and motels [1.23].

The following activities are normally within the definition of ''loan': equipment rental [1.5]; car rental [1.6]; debit cards [1.8]; overdraft facilities [1.12]; and newspaper classified advertisements which provide seven days deferred payment [1.27].

Assignees of loans who are already credit providers are considered to be the credit provider in relation to the assigned debt (and therefore entitled to obtain further credit reports), but assignees who are not already credit providers would not normally be so regarded [1.14].

Insurers are not normally credit providers, and obligations to repay overpaid benefits or arrangements to defer insurance premiums do not make them so [1.16]. If a separate credit provision function is a substantial part of the overall business of an insurer, it may be a credit provider in relation to that function only [1.17]. If a substantial part of an insurer's business is credit provision, the provision of some loans to insurance agents may constitute credit provision [1.18].

The position of public utilities needs to be considered on a case-by-case basis, depending largely on the contractual relationship between the utility supplier and customer, and whether the utility provider is under an obligation to provide the service [1.25]. Councils are not credit providers in relation to rates [1.26]. Commonwealth agencies cannot be credit providers (s11B(1)) [s1.24]. If individuals are provided with legal services on the basis of deferred payment owed directly to a Legal Aid Commission, the Commission could be a credit provider [1.19]. State government business development loans are normally regarded as commercial credit [1.9].

Meaning of 'credit reporting agency'

Mercantile agents will be credit reporting agencies if they disclose information relating to an individual's credit worthiness to a credit provider without being engaged by the credit provider in relation to collection of a debt from the individual [2.3].

Provision of de-identified statistical information about credit transactions will not make the provider a credit reporting agency, but credit providers may be prevented from handing over client information to the producer of such statistics by s18N [s2.4].

The following are likely to make the distributor a ''credit reporting agency': ''bad payer' blacklists to hotels and motels [2.5]; and video hire overdue payments lists [2.6]. In contrast, the following are not a ''credit reporting agency': a cheque guarantee business [2.8]; and a bank giving another bank a banker's opinion [2.9]. The position of real estate databases depends on whether information relating to individuals' credit transactions are disclosed (which does not include housing rental), and whether it is disclosed outside the real estate industry [2.7].

Agents, advisers, and loan managers of a credit provider

An agent of a credit reporting agency should apply for credit reports using its own identifier [3.3]. Principal and agent can exchange information about individuals to carry out the purposes of the agency [3.4]. Agents (except for debt collectors) have all the responsibilities of a credit provider under the Act [3.5]. Legal advisers to credit providers will not always be agents under s11B(5),but rather employees (s8(1)), or persons who manage loans (s18N(1)(f)) [s3.6]. However, if they are agents for the purpose of, say, drawing up mortgage documentation, then they have the obligations of a credit provider [3.7].

Where a bank provides services for another credit provider (for example, a credit union), the bank has the responsibilities of a credit provider [3.9]. Genuine loan managers (as distinct from debt collectors) are not precluded from obtaining credit reports on overdue loans [3.9]. However, an organisation that acts as both loan managers and debt collectors will have to separate its operations carefully [3.10].

(This summary will be continued in the next issue.)

Graham Greenleaf