Privacy law changes are imminent

The Privacy Amendment (Enhancing Privacy Protection) Bill 2012 was passed by both houses of parliament on 29 November 2012 and will now become law. The proposed changes are extensive – the Bill runs to nearly 250 pages.

The Bill will amend the Privacy Act 1988 (Cth) to introduce a unified set of Australian Privacy Principles (APPs) that apply to both the private sector and the Commonwealth public sector.

Due to a transitional period of 15 months, the key privacy changes in the Bill will not commence until March 2014. Companies and Commonwealth government agencies need to be aware of the changes because they will need to change their privacy policies and practices. You should think about this now, even before the changes take effect in 2014, because the changes may affect some decisions you make now – eg if you are about to enter an agreement involving the storage or processing of personal information offshore. Here are the key things you need to know.

What do you need to do?

  1. Change your privacy policy. After the Bill is passed you will have to change your organisation’s Privacy Policy to:
    • explain how a person can complain about a breach of the APPs and how you will deal with privacy complaints;
    • specify if you are likely to disclose personal information to recipients overseas and, if so, the countries in which such recipients are likely to be located; and
    • remove redundant references, such as to “National Privacy Principles”.
  2. Provide more information to individuals when you collect their personal information. Currently when you collect personal information you need to notify the individual about things such as the identity of your organisation, the purposes of collecting the information and the right to seek access to the information you hold about them. Once the Bill becomes law you will also need to notify them: • if you are likely to disclose their personal information to recipients overseas and, if so, the countries in which such recipients are likely to be located;
    • that your privacy policy includes details of how to seek access to their personal information and correction of the information; and
    • that your privacy policy includes details of how to complain about a breach of the APPs and how you will deal with privacy complaints.
  3. Implement a privacy compliance program. Your organisation will have an obligation to develop and document a privacy compliance program that:
    • ensures your organisation complies with the APPs; and
    • enables your organisation to deal with inquiries or complaints about compliance with the APPs.

The explanatory memorandum for the Bill suggests that your compliance program could include:

  • establishing procedures to identify and manage privacy risks and compliance issues;
  • establishing procedures to manage privacy complaints and inquiries;
  • developing information explaining your privacy policies and procedures; and
  • training your staff.

In addition, a compliance program should include ways to monitor the performance of the program and to adjust the program to continually improve it.

There is an Australian Standard on Compliance Programs (AS 3806-2006) which you may find helpful.

  1. Change your direct marketing practices. The Spam Act 2003 (Cth) will continue to apply to commercial electronic messages that you send. However the Bill will place restrictions on direct marketing activities if you send direct marketing materials in hard copy. You will have to:
    • maintain a simple mechanism allowing individuals to “opt out” of further direct marketing;
    • include a statement in each direct marketing communication that a request to “opt out” can be made;
    • obtain an individual’s consent before using their sensitive information (eg health information or information about religion, race or union membership) for direct marketing; and
    • maintain details of the source of the personal information you use for direct marketing, since individuals will generally be entitled to obtain this information from you. You may need to amend your marketing systems (eg addfields into your marketing database) to give effect to this.
  2. Review arrangements for offshore data storage or processing. You will need to review any arrangements you have in place, or that you are considering, which involve the transfer of personal information offshore, eg outsourcing or cloud computing arrangements.

Under the Bill, if your organisation discloses personal information to any overseas recipient it will have to take reasonable steps to ensure that the overseas recipient does not breach the APPs and if the recipient does breach the APPs, you will be fully responsible for that breach. However the preceding sentence does not apply if you reasonably believe that the recipient is subject to a law or binding scheme imposing privacy protections that are substantially similar to the APPs and that there are mechanisms for individuals to enforce that law or binding scheme. It also does not apply where the individual gives informed consent to your organisation not being accountable for the acts or omissions of the overseas recipient, but we expect that in many cases it will be impractical to obtain this consent.

For any existing and proposed agreements involving the transfer of personal information offshore, consider the risks involved. Ensure the recipient organisation is reputable. Where practical, you can mitigate the risks contractually by ensuring the recipient organisation undertakes to comply with the APPs and gives a broad indemnity in your favour in relation to losses flowing from any privacy breach.

Time for a privacy audit

As a first step it would be a good idea to arrange an internal or external privacy audit of your organisation. The audit would review what personal information you collect, how you collect it and how you use, store and disclose it. It would also look at the steps you have in place for destroying or de-identifying personal information where required to comply with the Privacy Act and the adequacy of your existing privacy policies, practices and training program. The output of the audit should be a report recommending changes you need to implement to comply with the amended Privacy Act.

What won’t change?

The Bill won’t change the following important aspects of the Privacy Act:

  1. The employee records exemption. An act of an organisation that is or was an employer of an individual will be exempt from the APPs if the act is directly related to a current or former employment relationship with the individual and directly related to an employee record held by the organisation and relating to the individual, eg a record about the person’s terms of employment or their performance or conduct. Generally, this exemption applies to private sector organisations and not the Commonwealth government.
  2. The exemption for related bodies corporate. The disclosure of personal information (other than sensitive information) between related bodies corporate will continue to be permitted and will not be a breach of privacy. Importantly however, a company disclosing personal information to a related company outside Australia will be accountable for any privacy breaches by that related company unless an exception applies (see discussion at 5 above).

Related Commonwealth laws such as the Spam Act 2003, the Freedom of Information Act 1982 and the Do Not Call Register Act 2006 will all continue in effect.

What else do you need to know?

In addition to the changes highlighted above, the Bill proposes the following:

  1. The Privacy Commissioner’s powers will be bolstered. For example, the Privacy Commissioner will be able to take enforcement steps after investigating a privacy breach on his/her own motion. Also the Commissioner will be able to apply to a court for a civil penalty if your organisation commits a serious interference with a person’s privacy or repeatedly engages in interferences with privacy. The penalties will be up to $1.1 million for a company. The civil penalties can also apply to any entity that aids, abets or is knowingly concerned in, serious or repeated privacy breaches.
  2. The Bill will completely revise the credit reporting provisions of the Privacy Act. These provisions will be of interest not only to credit reporting agencies, but also to credit providers such as banks and other providers of loans or credit cards. The Bill’s intention is to improve privacy protections in relation to credit reporting and to clarify and update the credit reporting privacy regime.

Further privacy law reforms are likely to follow the Bill, both at Commonwealth and state/territory level.