New Privacy Regulations Exempt Commercial Credit Providers From EDR

by K&L Gates LLP
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Commercial credit providers and utilities are not required to join a recognised external dispute resolution scheme to participate in credit reporting until 12 March 2015.

The Attorney-General has released regulations - Privacy Amendment (External Dispute Resolution Scheme - Transitional) Regulation 2014 (Privacy Amendment (EDR) Regulation) suspending the requirement for commercial credit providers and utilities to be members of an external dispute resolution (EDR) scheme for 12 months.

Background

Amendments to the Privacy Act 1988 (Cth) (Privacy Act) by the Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth), coming into force on 12 March 2014, require credit providers to be a member of an EDR scheme to be able to disclose credit information about individuals to a credit reporting body. From 12 March 2014, the Privacy Act will include a broad definition of credit providers that includes both consumer and commercial credit providers. This means that commercial credit providers and utilities will be caught within the new credit reporting regime. Prior to the new regulations, those commercial credit providers would have needed to be a member of an EDR scheme recognised by the Australian Information Commissioner (Commissioner).

In effect, commercial credit providers and utilities would need to be a member of a recognised EDR scheme in order to:

  • disclose credit information about an individual (which includes identification information) to a credit reporting body
    or
  • collect credit reporting information about an individual.
    The Privacy Amendment (EDR) Regulation exempts commercial credit providers and utilities from this requirement until 12 March 2015.

Rationale

For utilities, all states and territories have EDR schemes in place that apply to utilities operating in their jurisdiction. However, not all utility EDR schemes are able to be recognised by the Commissioner. For example, a utility EDR scheme's jurisdiction might be limited to exercising powers in performance of its state or territory based function. The Attorney-General anticipates that, given the additional time, these hurdles for schemes to obtain EDR recognition from the Commissioner will be removed.

In relation to commercial credit providers, the Explanatory Statement to the Privacy Amendment (EDR) Regulation provides that:

  • it is the clear policy intention to bring commercial credit providers within the scope of EDR obligations to the extent that they access consumer credit reporting information
  • some stakeholders have argued that commercial credit providers should be exempt from EDR obligations as, aside from obtaining credit reporting information, they do not otherwise participate in the credit reporting environment
  • some commercial credit providers may instead choose not to access credit reporting information when making their lending decision which in turn may also reduce the overall availability of credit.

In view of this, the Attorney-General has provided another 12 months for a solution to be found.

Issues for Commercial Credit Providers

Commercial credit providers should watch this space as it appears the Attorney-General contemplates that a solution in which commercial credit providers will be required to be members of EDR schemes is the way forward. In the meantime, commercial credit providers and utilities should continue to assess their initial and ongoing compliance with other obligations under Part IIIA (relating to credit reporting), the Credit Reporting Privacy Code and the Australian Privacy Principles.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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