Have you ever applied for credit, whether that credit is in the form of a loan, a credit card or even a hire purchase agreement? Or are you in the business of providing credit? If so, the new Credit Reporting Privacy Code will affect you.
As New Zealanders' love affair with credit continues to grow, the databases in which credit information is stored have become larger.
Credit reporting agencies collect and hold credit information about individuals and disclose that information to their subscribers. That information is then used to assess an individual's credit worthiness.
The information held on those databases may affect a person's credit reputation for years. The question is, how do you know whether that information is accurate?
Up to now the collection, use and disclosure of personal information has been governed by the Privacy Act 1993. With the passage of time, however, issues have arisen regarding the collection and use of credit information.
Credit reporting involves a delicate balance. On one hand it is important to protect a person's right to privacy, on the other hand it is crucial that those involved in providing credit to individuals can assess a person's credit history before they agree to provide credit to them.
With these issues in mind, the Office of the Privacy Commissioner (in consultation with the credit industry) developed the Credit Reporting Privacy Code 2004. The Code is aimed at providing a balance between customer privacy and business needs in creating an "orderly, fair, transparent and accurate reporting system".
The Code came into full effect on 1 April 2006. It applies to credit reporters, which are businesses that collect and sell to third parties information about individuals that is relevant to the assessment of the credit worthiness of the individual concerned.
It is not just credit reporters that are affected by the Code. Credit providers (like banks, finance companies and retailers offering credit services) will also be affected by the Code, as well as individuals about whom credit information is collected.
So how does the Code aim to remedy the existing privacy issues? The key provisions of the Code that you should be aware of are as follows:
- Credit reporters must provide individuals with free access to their own credit information (previously credit reporters could charge for this information).
- Credit reporters are now required to proactively check the accuracy of credit information before that information is used or disclosed.
- Credit reporters must establish and maintain internal controls to ensure that credit information is up to date, complete, relevant and not misleading. Any information that is disputed must be identified or suppressed until its accuracy is determined.
- Credit reporters are required to enter into subscriber agreements that comply with the Code before disclosing any information to a subscriber.
- Credit reporters must ensure individuals have information about their rights through clearer notification and the publication of a prescribed Summary of Rights. Credit reporters will generally pass this responsibility onto the credit provider.
- There are restrictions on how long credit reporters can retain credit information.
- Credit reporters must have systems in place to safeguard against unauthorised access.
- Credit reporters must establish and maintain internal complaints handling procedures that comply with the Code to ensure effective disputes resolution procedures.
If you are in the business of providing credit of any sort, it is crucial that you review the privacy wording contained in your credit application forms to ensure that the correct privacy advice is being given to customers and you are obtaining the appropriate consents in order to carry out credit checks.
Even if you're not in the business of providing credit it is also important you are aware of your rights in respect of the credit information held about you.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.