Submission - Credit Reporting Regulatory Framework: Submission to ALRC Privacy Inquiry (December 2007)

Privacy Findings

Consumer Protection Findings

General principles

These would normally be the UPPs in the Privacy Act 1988, but in the case of credit reporting the Act may serve only as a place-holder for the proposed Privacy (Credit Reporting Information) Regulations which will contain the general principles for credit reporting.

The principles used in this Report for determining when an element should be included in the Privacy Act 1988 are:

• The issue must, in substance, be a privacy issue rather than a consumer protection issue;
• The issue requires certainty, rather than flexibility;
• The issue relates to fundamental privacy rights, rather than minor consumer concerns or basic operational matters.

General principles

The Report finds that one of the criticisms of credit regulation in Australia is that there are no general fairness principles for credit providers, in contrast to the general principles that apply to other financial services providers.

No general principles are in place regarding responsible lending or responsible credit marketing (in stark contrast to other jurisdictions such as the UK and USA).

Detailed regulations

The Report finds that the proposed Privacy (Credit Reporting Information) Regulations are likely to form the core of privacy protection in the credit reporting environment. This Report adopts the following tests for the content of the proposed Regulations:

• The issue must, in substance, be a privacy issue rather than a consumer protection issue;
• The issue requires a degree of flexibility – Regulations can be amended more quickly than the Privacy Act 1988 itself;
• The issue relates to fundamental privacy rights, rather minor consumer concerns or basic operational matters.

Detailed regulations

The Report finds that some detailed regulations are currently provided in State and Territory legislation, including the UCCC and the draft Finance Broking Bill.

However, they do not adequately cover responsible lending or responsible credit marketing across the entire credit market.

Industry operating rules and best practice

This Report finds that there is support for an industry Code to act as an additional layer of regulation. This Report adopts the following tests for the content of a potential industry Code:

• The issue might be a privacy issue or a consumer protection issue (or both);
• The issue requires significant flexibility – the industry Code may potentially be quick to amend;
• The issue does not relate to fundamental privacy rights;
• The issue relates to minor consumer concerns or basic operational matters; or
• The issue regards industry branding or cooperation.

Industry operating rules and best practice

The Report finds that some general best practice guidance may be available through industry Codes and also sometimes through regulator guidelines (e.g. ASIC / ACCC Debt Collection Guidelines).

However, at this stage there is no best practice guidance available for responsible lending or responsible credit marketing.