MEDIA RELEASE : 16 June 2010
Privacy Commissioner, Marie Shroff, today publicly notified a proposed amendment to the Credit Reporting Privacy Code and invited anyone interested to make a submission by 13 August. The amendments result from a two year review of the code, which included consulting a reference group of consumer and industry representatives.
"The proposed amendment represents a major change to the regulation of credit reporting in New Zealand," the Commissioner said. "I have examined the arguments carefully and concluded that the negative effects on privacy associated with more comprehensive credit reporting and use of the driver licence can be managed with strong protections. I am also persuaded that the changes will bring substantial benefits both to individuals in their dealings with the credit system and to the community generally." These benefits are expected to include more accuracy and completeness in the credit reporting system and allowing better assessments of creditworthiness to facilitate responsible lending.
"Public consultation is an opportunity for both the public and business to have their say on the proposed changes and on whether the protections are sufficient. I encourage the public, as well as the industry, to give me their views," Marie Shroff said. "I will consider these carefully before determining the final shape of changes to the code."
"Let's be clear - more comprehensive reporting brings new levels of intrusiveness into people's lives when they seek credit. It involves the wider sharing of private financial information," the Commissioner said.
Currently the code protects privacy by prohibiting the reporting of positive credit information such as a good record of paying bills, and only allows the reporting of negative information which shows that an individual has defaulted on their credit obligations. Under the proposed amendment, everyone's credit account information will be liable to be reported when they are seeking credit, whether they have a good or bad credit record.
"Given the substantial increase in sensitive financial information that will be available to third parties on credit reporting databases, the amendment proposes strong new controls to protect privacy. These additional controls are necessary to protect individuals and ensure that the credit reporting system is trustworthy and accountable," Marie Shroff said.
The amendment proposes to balance more comprehensive credit reporting by introducing new elements of external accountability for credit reporters. The code already requires credit reporters to undertake systematic compliance reviews to ensure that they meet security, access and accuracy controls. The amendment will significantly strengthen these obligations by requiring their reviewers to include an external, independent person and to report to the Commissioner each year.
The amendment will allow credit account information to be made available only to credit providers. It will be off limits to employers, landlords and debt collectors.
The amendment will allow the controlled use of driver licence numbers in the credit reporting system for the first time. Although this is an inroad into the existing prohibition on use of unique identifiers for unrelated purposes, the change should bring benefits to individuals by allowing more accurate identification in the credit reporting system. This can help reduce the harm currently caused where credit reporters match individuals with the wrong credit information. Controls in the amendment will prevent credit reporters building up a database of driver licence numbers.
Other changes proposed to be made by the amendment include:
- an explicit prohibition on the use by credit reporters of credit information for direct marketing purposes;
- authorising the controlled use of the index of deaths for removing or suppressing information from credit reporting databases;
- requiring credit reporters to provide individuals with a general explanation about credit scores contained in credit reports released to them;
- requiring credit reporters to make available official translations into other languages of summaries of rights where these are provided by the Privacy Commissioner.
For further information contact: Cathy Henry 021 509 735 or 04 474 7610.
Notes for editors: The Credit Reporting Privacy Code 2004 is a code of practice issued by the Privacy Commissioner under the Privacy Act 1993. It controls the practices of agencies that carry on the business of reporting on the creditworthiness of individuals. Amongst other things, the code limits the information that may be disclosed by credit reporters, limits who may access credit reporting databases and provides retention periods for credit information held by credit reporters. The full code is also available at www.privacy.org.nz. A set of FAQs on the code and amendment is attached.