Privacy Commissioner - Te Mana Matapono Matatapu

Skip to content

Information paper for Credit Reporting Privacy Code Amendment No 3

Credit Reporting Privacy Code 2004, Proposed Amendment No. 3: Information paper

Incorporation of the Insolvency Act's No Asset Procedure and the retention of Bankruptcy information

[Please note that an Addendum at the end of this Information Paper describes the minor changes made between this paper and the final version of the code amendment.] 

The Privacy Commissioner proposes to amend the Credit Reporting Privacy Code 2004 to allow the reporting and retention of 'No Asset Procedure' information under the Insolvency Act 2006 in a manner consistent with the Insolvency Amendment Bill currently before Parliament.  The proposed amendment will also permit the retention of multiple insolvency information indefinitely, consistent with the Insolvency Amendment Bill.

Background information on the Credit Reporting Privacy Code, the Insolvency Act 2006, and the Insolvency Amendment Bill can be found at Appendix A.

(The Code anticipated a full review two years after it became fully operational.  Please note that the Commissioner is undertaking that general review of the code at the present time.  This amendment does not arise from that review.  Any proposed changes arising from that review will be publicly notified at a later date.)

PROPOSED AMENDMENT No 3 TO THE CREDIT REPORTING PRIVACY CODE 2004

The Privacy Commissioner is proposing four amendments to the Code:

1. update the reference to the Insolvency Act 1967 and the register of bankrupts to reflect the Insolvency Act 2006;
2. authorise the collection and disclosure of No Asset Procedure (NAP) information by credit reporters;
3. specify the default period for which NAP information may be retained by credit reporters; and
4. specify the default period for which information regarding multiple insolvencies may be retained by credit reporters.

1. Updating the reference to the Insolvency Act 1967 and the register of bankrupts

Rule 1 of the Code currently allows credit reporters to collect credit information.  The definition of credit information includes information collected from a specified public register.    Schedule 2 of the Code specifies the public registers from which credit reporting agencies can collect information.

The registers specified in the Schedule are:

Enactment	Public Register Provision
Insolvency Act 1967	Section 118
Personal Property Securities Act 1999	Section 139
Companies Act 1993	Section 189

The reference to the Insolvency Act 1967 requires updating, as the 1967 Act has been replaced by the Insolvency Act 2006.  Section 118 of the 1967 Act referred to the register of bankrupts.  Section 62 of the 2006 Act is the equivalent.

The Privacy Commissioner proposes to amend Schedule 2 of the Code to replace the reference to section 118 of the Insolvency Act 1967 with a reference to section 62 of the Insolvency Act 2006.

2. Collection and disclosure of NAP information by credit reporters - definition of 'credit information'

Information that an individual is legally insolvent is relevant to the decision to extend credit.  Credit providers often rely on credit reporters to provide information on the legal solvency of an individual.  The Commissioner considers it desirable that credit reporters be permitted to collect and disclose NAP information under the Code. 

Rule 1 of the Code states that credit reporters may only collect personal information for the purposes of credit reporting if the information is 'credit information' (as defined in clause 1(5) of the Code).  Clause (h) of the definition currently includes information relating to adjudications, discharges, suspensions or discharges and annulments of bankruptcy of an individual but does not include NAP information (as this insolvency procedure did not exist when the Code was issued).

The Privacy Commissioner proposes to omit clause (h) of the definition of 'credit information' and substitute the following: (h) the following insolvency information:

(i)     adjudications, discharges suspensions or discharges and annulments of bankruptcy of an individual;

(ii)    entry to and termination and discharge from the no asset procedure;

The definition of credit information also includes information sourced from a specified public register (i.e. a public register listed in Schedule 2).  Adding the register to Schedule 2 will make it clear that credit reporting agencies may collect and disclose information from that register.

The Privacy Commissioner proposes to amend Schedule 2 of the Code to include information sourced from the NAP public register (established by section 368 of the Insolvency Act 2006) as 'credit information' that can be collected and disclosed by credit reporters. 

3. Retention of NAP information

Parliament is currently considering the period of time for which NAP information should be available on the public register of individuals admitted to the NAP. 

Rule 9 of the Code deals with the retention of personal information by credit reporters by stating that: 

1. A credit reporter that holds credit information must not keep that information for longer than is required for the purposes for which the information may lawfully be used.
2. It will be sufficient compliance with subrule (1) if a credit reporter holds credit information of the types specified in column 1 of Schedule 1 for no longer than the permitted period set out in column 2 for that type.

Schedule 1 of the Code specifies retention periods for the following types of information:

1. lost, stolen, or compromised identification documents information;
2. credit application information;
3. credit default information;
4. serious credit infringement information;
5. judgments;
6. bankruptcy information; and
7. previous enquiry record.

Parliament is currently considering the period for which NAP information should be available on the public register. The Bill in its current form will make this information available for five years. The Code proposes to align its retention period with the Bill. As it remains possible that the Bill could change before final enactment, the Commissioner will wait until the Insolvency Amendment Bill has received the Royal assent before finally issuing the Amendment.

The Privacy Commissioner proposes to amend Schedule 1 of the Code to specify the period for which information from the NAP public register can be retained by credit reporters. The Commissioner proposes to align the retention period of NAP information in Schedule 1 with the period for which the information is available on the public register (expected to be five years).

4. Retention of information regarding multiple insolvencies

Parliament is currently considering making an individual's insolvency information available on the public register indefinitely, following that individual's second insolvency.  An insolvency is either entering into the NAP or being adjudged bankrupt.  Upon an individual's second insolvency, their details and the details of both insolvencies, and any subsequent insolvencies, will be available to search on the public register indefinitely.  As outlined above, Rule 9 of the Code deals with the retention of personal information by credit reporting agencies.  Schedule 1 of the Code currently allows bankruptcy information to be retained for seven years and makes no special provision in relation to multiple insolvencies.

The Privacy Commissioner proposes to align the retention period for multiple insolvency information in Schedule 1 with the period for which this information is available on the public register (expected to be indefinitely).

This period will not be confirmed until the Insolvency Amendment Bill has received the Royal assent.

Appendix A: Background Information

The Credit Reporting Privacy Code 2004

The Credit Reporting Privacy Code was issued in 2004 by the Privacy Commissioner.

The Code specifies the personal information that may be collected by credit reporters and the agencies to which they can disclose that information.  The Code also regulates how long information may be retained.

A copy of the Code can be downloaded from www.privacy.org.nz/credit-reporting-privacy-code.

The Code was issued prior to the establishment of the No Asset Procedure. Therefore the Code makes no reference to NAP information or information sourced from the NAP register amongst the information that credit reporters are permitted to collect, retain and disclose.

The Insolvency Act 2006

The Insolvency Act 2006 introduced the No Asset Procedure (NAP) as an alternative to bankruptcy. The NAP has two main purposes:

1. to give individuals a fresh start; and
2. to allow individuals to avoid the stigma of bankruptcy.

Under section 363(1) of the Insolvency Act 2006, an individual may enter into the NAP if the Official Assignee is satisfied on reasonable grounds that:

• a. the debtor has no realisable assets; and
• b. the debtor has not previously been admitted to the no asset procedure; and
• c. the debtor has not previously been adjudicated bankrupt; and
• d. the debtor has total debts (excluding any student loan balance) that are not less than $1,000, and not more than $40,000; and
• e. under a prescribed means test, the debtor does not have the means of repaying any amount towards those debts.

Individuals are subject to the NAP for one year, during which time their details are available on the public register maintained by the Ministry of Economic Development. 

A copy of the Insolvency Act 2006 can be downloaded from www.legislation.govt.nz/act/public/2006/0055/latest/DLM385299.html .

The Insolvency Amendment Bill

The Minister of Commerce introduced the Insolvency Amendment Bill to Parliament.  The Bill, among other things, amends the periods of time for which the personal information of individuals admitted to the NAP and adjudged bankrupt is available on the public register. 

Clause 10 of the Bill will make the details of individuals admitted to the NAP available on the public register for four years following their discharge from the NAP.  Currently, an individual is admitted to the NAP for one year.  During that time their information is available on the public register.  The Bill extends the period for which an individuals details are listed on the public register from one year to five years.

Clause 11 of the Bill also requires the details of individuals who have had multiple insolvencies to be retained on the Insolvency Register indefinitely.  Multiple insolvencies is defined as entering both the no asset procedure and being adjudged bankrupt, or being adjudged bankrupt two or more times.  Currently an individuals details are listed on the public register for seven years following the bankruptcy, regardless of prior bankruptcies.

A copy of the Insolvency Amendment Bill and the Select Committee report on the Bill can be downloaded from

www.legislation.govt.nz/bill/government/2009/0019-1/latest/versions.aspx.

A copy of the Parliamentary debates on the Bill can be downloaded from

www.parliament.nz/en-NZ/PB/Legislation/Bills/8/a/d/00DBHOH_BILL9071_1-Insolvency-Amendment-Bill.htm 

ADDENDUM

Credit Reporting Privacy Code 2004 Amendment No 3

The Privacy Commissioner has recently issued the Credit Reporting Privacy Code Amendment No 3, as notified in the Gazette on 14 January 2010.  The amendment was publicly consulted on in 2009 and will come into force on 22 February 2010.

This information paper was the basis for public consultation and the changes proposed were largely carried through into the Amendment No 3 issued by the Privacy Commissioner.  This addendum outlines the changes made to the proposals that were consulted on and the reasons for the changes.

The proposals were to amend the Code to:

1. update the reference to the Insolvency Act 1967 and the register of bankrupts to reflect the Insolvency Act 2006;
   
   This amendment was carried out by inserting a reference to the Insolvency Act 2006 into Schedule 2 of the Code, while retaining the reference to the 1967 Act to ensure historical cases are still covered by the Code.
2. authorise the collection and disclosure of No Asset Procedure (NAP) information by credit reporters;
   
   This amendment proceeded without change.
3. specify the default period for which NAP information may be retained by credit reporters; and
   
   This amendment was made, although the specified period was changed from the proposed 'five years from the date of judgment' to 'four years from the date of discharge from the order'.  This is to give greater consistency with the Insolvency Act 2006 and to provide greater accuracy with regard to the small number of cases where the NAP may last longer than five years.
   
   In addition to this change, a similar change was made to the way the retention period for single bankruptcy is expressed.  The Amendment changed the period from 'seven years from the date of order' to 'four years from the date of discharge'.  In most cases this will have no practical difference, but the change provides more accuracy for the small amount of cases where a bankruptcy order may last longer than seven years.
4. specify the default period for which information regarding multiple insolvencies may be retained by credit reporters.
   
   This amendment proceeded without change.

For a full version of the Credit Reporting Privacy Code 2004 with commentary and amendments, please click here.