News Flash of Importance to the Rental Property Industry

[essence]

I received this by email today. Has anybody else been made aware of this. Pretty disastrous if this goes ahead!!

News Flash of Importance to the Rental Property Industry

We are sorry if you consider this spam but are you aware that the Office of Privacy Commissioner (OPC) is planning to outlaw tenant checking and reporting systems, such as our affiliated company's, Tenancy Information New Zealand (TINZ) system, at www.tinz.net.nz, and Veda Advantage (Veda) from storing and reporting anything about Tenancy issues.

The OPC has powers under the Privacy Act to make their own law/code without any act of Parliament. The Credit Reporting Privacy Code 2004 (CRPC 2004) was such an enactment which all credit reporters have to comply with - TINZ and Veda are creditor reporters to our industry.

The OPC carry out 2 yearly reviews and this is the latest in the round of constant amendments to this Code.

If the below amendment is incorporated into the CPRC 2004, which is to take effect on 1/4/2011, it will mean the rental industry will go back to square one -

You won't be able to pre-check tenants or record when you have had a problem tenant.

One of the planned amendments is to clarify the word "credit" - only credit accounts can be reported - and thereby, stating Tenancy Tribunal orders, 10 day notices and ratings are not credit accounts under the new definitions. We assume then the Ministry of Justice system will be outlawed as a result.

We have just been told that we have until 13/8/10 to make submissions.

We would highly recommend that you look at the attached >template of a prepared document<< , which we highly recommend you immediately complete, under your own letterhead, and get back to us to support our submissions. Please email us at [email protected] or fax us on (09) 6250121.

If you do nothing ... this may lead to the demise of TINZ and Veda being able help you avoid bad tenants.

The OPC have indicated they want to bring in positive reporting rather than having the current system of only reporting negative issues, however, you won't be able to promote good tenants by placing good ratings on TINZ as it is not credit information under the definition.

If you want to view the full Information Paper of the Proposed Amendment No 4 to the CRPC 2004 please >>click here<<

[Keys]

Bad tenants have second chance at your expense.

***IMPORTANT: The Privacy Commissoner is planning to outlaw tenant checking and reporting systems such as TINZ and Veda from storing and reporting anything about tenancy issues. This means you will no longer be able to pre-check tenants or record when you have had a problem tenant. We have until the 13/08/10 to get submissions in to prevent this law change from happening. Both TINZ and Veda are looking to our clients, the industry, for support. We would appreciate it if you could make your submission using the attached submission template, then email it back to us at [email protected]. If you do nothing, then it may lead to the demise of TINZ and Veda from being able to help you avoid bad tenants.***

Draft submission to OPC For TINZ Customers
Drafting notes are in italics
This is to be sent to the email address below before the 13th August.

On your letterhead

Credit Reporting Privacy Code Amendment
Office of the Privacy Commissioner
PO Box 466
Auckland 1140
Email: [email protected]

Insert date
Submission on the proposed Credit Reporting Privacy Code 2004 (the Code) Amendment 4
Introduction:
In a few paragraphs say who you are; what your business does and (if you consider it relevant) how long your business has been going for.
State whether you would like to attend the meetings which the Privacy Commissioner holds with submitters.

Then state what your submission is, change the wording or give examples that occur to you - you can use your own words to rephrase this
1. Tenancy Information N Z Ltd has alerted us to the proposed amendment to the Code.

2. We oppose one of the changes proposed – the change to the definition of "credit default information". We submit that the definition of credit default information should remain unchanged.

3. We believe that limiting the definition of credit default information will lead to less accurate credit checks and credit scores, which in turn will undermine our risk assessments of prospective tenants. The exclusion of some information that we are used to seeing reported will be misleading. That is unfair and economically unsound.

4. Government debts will be relegated to a second class status -harder to recover and ignored on credit reports. The result of that will be less money recovered and an imbalance in repayments.

5. We as landlords, are regularly awarded monies for rent and related amounts in Tenancy Tribunal decisions .We believe that we are able to load these as defaults under the Credit Reporting Privacy Code( the Code). We believe that this change will prevent us from doing this.

6. Yet if we are awarded a sum of money and are trying to recover it we should be in the same position as a person awarded a judgment for a sum of money. The proposed change will disadvantage us in an unfair way.

7. This will mean that some bills are treated better than others. Debtors who are not strictly in default on a ‘credit account will be able to avoid paying here bills. We believe this is unjust and will lead to some creditors being treated worse than others in an unfair way. Although this is by no means certain we have assumed that the changed definition will be limited by the definition of credit in the Code –
credit means property or services acquired before payment, and money on loan. Is a tenancy agreement – property or a service? It is both. However the legislation around residential tenancies constrains this and also obliges landlords to go through the Tenancy Tribunal. If the landlords succeed and are awarded monies then although those monies are in compensation for ‘property rights’ and ‘debts’ they may not be within the new definition. We are opposed to this change. It is unfair, arbitrary and wrong. We do not understand the justification for such a change at a time when creditors are under siege. People regularly fail to pay their bills, and tenants who are taken to the Tenancy Tribunal in virtually every case go on to fail to pay.

Meetings on the Code Amendment

1. We ask to be included in any meetings on this important topic.
2. Please contact (insert who should be contacted )
3. These are difficult times. The proposed change to the definition of credit default information will make it harder to assess risk and to recover debt.
4. In summary, we submit that the definition of "credit information" proposed in clause 3(3) of the proposed amendment should not be made.

5. Please contact: (insert details of a contact person and address) if you have questions concerning this submission.

Check your draft- ensure there are no italics – no drafting notes- and only put in what you are happy with

Yours faithfully

Keys {of course, quotation makes it all italics! emboldened has been done} (must lengthen to 10 characters )

[Perry]

Last I knew, passing statute was
the prerogative of Parliament, rather
than the Privacy Commissioner.
.

[Perry]

Some Strictly Defined Situations?

Where are these defined?

Proposed Amendment No 4 to the
Credit Reporting Privacy Code 2004 (Page12)

Only certain people can access your report for certain purposes

The Code limits the people who can gain access to your credit information.
These will usually be credit providers who are considering your application for
credit. In some strictly defined situations the information may be made
available to prospective landlords, employers or insurers, to debt collectors,
to those involved in court proceedings and to certain public sector agencies.
Your credit information cannot be used or disclosed by a credit reporter for
direct marketing purposes. Only registered credit providers can have access
to your credit account information.

Your consent is required in most situations

Most credit checks can only take place with your authorisation. This applies to
access by credit providers, prospective landlords and prospective employers.
Your authorisation may not be required for access by certain public sector
agencies, those involved in court proceedings and debt collectors. The credit
reporter is required to log each access that is made to your information and
will normally disclose this information to you on request.

Bold emphasis is mine.
.

[ChrisD]

Last I knew, passing statute was
the prerogative of Parliament, rather
than the Privacy Commissioner.
.

No statute is being changed - the existing statute gives executive power to the privacy commissioner to make changes to regulations as he sees fit, within the bounds of the legislation.

[Perry]

Semantics

Thanks - I'd caught up with that when I came
to appreciate that it was a Code.

Next, is it something about the way the TINZ
thing is written?

IMPORTANT: The Privacy Commissoner is planning to outlaw tenant checking and reporting systems such as TINZ and Veda from storing and reporting anything about tenancy issues.

What are "issues?" Do they differ from credit
reports? Seems a bit muddled, to me, given
the extract I've quoted above from the PC's
web site.
.

[Son of G]

Stop press!! Have we all overlooked the fine print

Proposed Amendment No 4 to the
Credit Reporting Privacy Code 2004 (Page12)


Your authorisation may not be required for access by certain public sector
agencies, those involved in court proceedings and debt collectors. The credit
reporter is required to log each access that is made to your information and
will normally disclose this information to you on request.

The key phrase is "those involved in court proceedings". The existing Rule 11(2)(c)(v) clearly includes tribunals. All those involved in tribunal hearings fall under this clause, and the clause is not being changed.

Also Rule 11(2)(a) clearly allows access to credit information for "the purpose
of enforcement of a debt owed by the individual concerned"

For the code as it currently stands see:

http://www.privacy.org.nz/assets/Files/Codes-of-Practice-materials/Credit-Reporting-Privacy-Code-2004-with-all-Amendments-and-commentary.pdf

I can not see wording that prohibits an existing landlord from being a debt collector.

The discussion document suggests credit providers should be registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (“FSPA”).
However I see nothing that excludes landlords being registerd as credit providers.

[muppet]

http://www.propertytalk.com/forum/showthread.php?p=225795#post225795

[Keys]

However I see nothing that excludes landlords being registerd as credit providers.

Individually, or as a group?

[SuperDad]

Last time I looked LLs don't provide credit, they provide accommodation.

This is going to be absolutely devastating for the rental property industry in my opinion. For those of us who do credit checks, we know exactly how important these checks are in determining the suitability of an applicant.

Quite frequently we get tenants who have good LL references but have a recently lodged large ($5000+) bad debt. While they have been good payers of rent in the past, this large debt could well impact on their ability to be good payers going forward.

Also, information gained by a gredit check is not restricted to an individual's creditworthiness. A credit check also reveals previous addresses, which in some cases is far more important that the credit info.

I will be making a submission.

Final question: why is this only being bought to our attention now, with a submission deadline of 13 August, when the call for submissions went out on 16 June? I got notification of this from TINZ on the monthly statement I received YESTERDAY - you think that TINZ wouyld be more active when it comes to something that will wipe out their businses.

[SuperDad]

Here is the important part from the information paper:

Clause 11(2) makes a number of changes to rule 11(3) of the Code, which currently sets l

imits on the disclosure of supplementary identification information. One of these changes is

to limit the disclosure of credit account information to “registered credit providers”. Clause

4(7) inserts a new definition of registered credit provider.
The Code currently permits disclosure to subscribers other than credit providers in certain
circumstances, including prospective landlords, prospective employers and insurance

companies. However, these other subscribers will not have access to credit account

information.

Credit account information is of value to credit providers in assessing an individual’s
creditworthiness. However, the other subscriber classes do not have a legitimate need to
access information about an individual’s current accounts. The circle of agencies that have
access to this sensitive financial information must be kept tightly controlled to those directly
involved in granting or enforcing credit.

I have a few thought already - will post them soon when I am done showing properties.

Paul.

[Son of G]

But does that exclude unregistered credit providers?

As soon as a tenant fails to pay rent, I am providing them credit, therefore I am a credit provider.

If a tenancy ends and the bond does not cover the outstanding rent & damage, I become a debt collector. The debt is recognised by the courts.

[SuperDad]

But does that exclude unregistered credit providers?

Yes.

As soon as a tenant fails to pay rent, I am providing them credit, therefore I am a credit provider.

You might be providing them credit, but you are not a Registered Credit Provider.

If a tenancy ends and the bond does not cover the outstanding rent & damage, I become a debt collector. The debt is recognised by the courts.

Even if this is so, that does not help at all for pre-tenancy credit checks.

[SuperDad]

Another interesting casualty of the tightening of rules around the disclosure of credit information:

It looks like employers will no longer have the authority to perform credit checks on prospective employees. As an employer in the property management industry, this poses a potential threat to my business on 2 fronts.

[Keys]

Joining the Independent Property Managers Association has just become easier. No credit checks.