1 Feb 2002, 09:00

A husband and wife operated a credit card account with a bank. They had a disagreement with the bank and the account was closed. An amount remained outstanding and the bank notified a credit reporter of the debt. When the debt was cleared, the bank advised the credit reporter that the default listing against the couple should be deleted. The credit reporter deleted the record of the husband's default, but not the wife's.

The couple applied to another bank for a loan. That bank obtained a credit report which showed an undisclosed debt against the wife and, on that basis, declined their application.

The couple said the wife was a second card holder and therefore the default should not have been listed under her name at all, and her name should not have been disclosed to the credit reporter.

The complaint raised issues under information privacy principles 7, 8, and 11. After investigating the matter, I formed the opinion that the bank was not in breach of those principles.

Principle 7

Principle 7 sets out the steps an agency must take when correcting information. An agency that holds personal information must take reasonable steps in the circumstances to ensure that the information is corrected. Amongst other obligations, the agency must inform each person or agency to whom the information has been disclosed of the correction if reasonably practicable (principle 7(4)).

In this case, the bank disclosed information to the credit reporter about the couple and the outstanding debt. When the debt was no longer outstanding, the bank took steps to update its internal records.

After the debt was paid, the bank sent a fax to the credit reporter asking that the default be removed. I was sent a copy of the fax, which clearly gave both names. The bank advised that because the account was a joint account it would not have asked the credit reporter to remove the husband's default listing only. The bank confirmed to the couple that this action had been taken. I was satisfied that the bank had asked the credit reporter to remove the default from both names. I considered that the bank had fully complied with the requirements of principle 7.

The couple was concerned that the bank did not check with the credit reporter to confirm that the faxed instructions had been carried out. In my view, principle 7 does not require an agency to take this action, and the bank did not breach principle 7 by failing to do so.

Principle 8

Principle 8 provides that an agency holding information must not use it without taking reasonable steps to ensure that the information is accurate. In this case, the bank did not hold the default information - the credit reporter did. Neither did the bank use the information in question. Since the bank neither held nor used this information, I considered it was not required by principle 8 to take any steps to ensure its accuracy.

Principle 11

Principle 11 provides that an agency holding information must not disclose that information unless the agency believes, on reasonable grounds, that one of a number of limited exceptions to principle 11 applies. One of the exceptions is where 'the disclosure of information is one of the purposes in connection with which the information was obtained or is directly related to the purposes in connection with which the information was obtained' (principle 11(a)).

The couple alleged that the bank account was not a joint account and that the wife was a 'second card holder' and that the bank was in a breach of principle 11 by disclosing the wife's name to the credit reporter along with the default details. The bank advised that the account was listed on its computer system as a joint account and all correspondence and statements about the account had consistently been addressed to both the husband and wife. I accepted the bank's view that the account was a joint account and that the couple were jointly and severally liable for it.

The bank also advised that the husband knew the outstanding amount on the account would be referred to a credit reporter if not paid. A file note showed that he was advised that both his name and his wife's name could be lodged with the credit reporter as debtors. One of the reasons a bank extending credit collects information about clients is to facilitate the recovery of debts incurred by those clients. This may include referring the matter to a debt collector and, quite commonly, to a credit reporter. I accepted that the bank advised the husband that the debt would be referred to a credit reporter if it was not repaid.

I considered that one of the purposes for which the bank collected information about the couple was to disclose it to a credit reporter in the event that the amount owing on the account was not paid. Accordingly, the exception provided by principle 11(a) applied and there was no breach of principle 11.

Having formed the opinion that the bank had not breached principles 7, 8 and 11, I discontinued my investigation and closed the file.

Indexing terms: Correction of personal information - Bank - Credit card account debt - Debt reported to credit reporter- Bank advised credit reporter that debt had been cleared - Whether bank obliged to check correction made by credit reporter - Information privacy principle 7(4)

Accuracy of personal information - Bank - Information no longer held or used by the bank - Information privacy principle 8

Disclosure of personal information - Bank - Names of joint account holders disclosed to credit reporter - Account holders advised default would be reported - Disclosure to credit reporter one of the purposes for collection - Information privacy principle 11(a)

June 2002