In this Alert, Hayden Delaney and Michele Davis discuss the implications that the upcoming legislative changes to privacy law will have on agencies and organisations, after the amendments to the Privacy Act 1988 (Cth) (Privacy Act) come into force on 12 March 2014, and outline what steps organisations need to take to ensure compliance.
Key take away points
- The new laws will apply to both government agencies and organisations. Organisations include individuals, body corporate, partnerships, unincorporated associates and trusts. There are some limited exemptions, including for “small business operators” discussed below.
- Determining what information held by that entity will be considered “personal information” is a key consideration when implementing new policies and procedures.
- It is vital that agencies and organisations determine what uses and disclosures it makes of personal information.
- Agencies and organisations should also be aware of the significant changes to the credit reporting requirements under the Privacy Act.
Amendments to the Privacy Act
The Privacy Act regulates ways in which certain agencies and organisations collect, use and disclose personal information within Australia. Privacy law has been the subject of some significant recent reforms. The Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Privacy Amendment Act) will see new privacy principles applying to both private sector organisations and government agencies, which will significantly affect the collection, handling and disclosure of personal information.
The Privacy Amendment Act has a substantially stricter compliance and penalty regime and will have a particularly significant impact on organisations that hold or collect personal information, engage in direct marketing, use or provide cloud services, or disclose personal information outside of Australia.
The amendments become operative on 12 March 2014, as a transition period of 15 months has been allowed for private sector organisations and government agencies to ensure compliance with the amended legislation. For the purposes of this Alert, further reference to the Privacy Act will include the amendments which will become operative by virtue of the Privacy Amendment Act.
Compliance with the new privacy law
The new laws will apply to both government agencies and organisations. Organisations include individuals, body corporate, partnerships, unincorporated associates and trusts. There are a number of limited exemptions. Of note is the “small business operator” exemption, designed so as not to overburden small businesses with the compliance burden. In general, a small business operator is a business with an annual turnover of $3,000,000 or less for a financial year, unless an exception applies. Common exceptions include businesses that provide a health service and hold health information (an employee record) and businesses that disclose or collect personal information for a benefit, service or advantage.
In order to ensure that the appropriate privacy policies and procedures are implemented by an agency or organisation, one of the most important matters that will need to be assessed will be determining what information held by that entity will be considered “personal information”. The definition of personal information has been amended to include:
“information or an opinion about an identified individual, or an individual who is reasonably identifiable: (a) whether the information or opinion is true or not; and (b) whether the information or opinion is recorded in a material form or not”.
This continuous obligation means that entities will need to take reasonable steps to proactively keep practices, procedures and systems relevant and timely, and not merely updated on a reactive basis. This obligation requires that reasonable privacy protections are actually built in to the design of information systems, a concept known as “privacy by design”. What is considered reasonable will depend on the specifics of the organisation, such as its nature and size, as well as the nature of the personal information held, as well as the anticipated consequences if a privacy breach was to occur. A due diligence exercise should be undertaken to discern the extent of these risks.
Some practical steps that organisations can take in the design of their information systems include:
- having procedures for identifying privacy risks at each stage of the information cycle;
- having security systems in place to protect the integrity of personal information; and
- ensuring that assessments are conducted for new projects to discern how personal information is collected, handled, disclosed and stored by the entity.
Periodic reviews of the adequacy and currency of the entity’s documentation and information systems would also be essential in keeping the privacy practices of the entity current and up to date.
Once an entity has classified its data, determined the types of personal information it has collected, and has established the systems that will ensure ongoing compliance and protection of personal information, the entity will then need to determine what uses and disclosures it makes. The reasons for collecting specific personal information will need to be considered in terms of understanding what it can be used for, as well as the disclosures the entity intends on making of that personal information.
The requirement for an individual to be notified of the collection of his personal information by an entity has also been reinforced as a result of the amendments. Specific details regarding the reasons for the collection, and the uses and intended disclosure of personal information for that specific collection event will need to be incorporated into a collection notification statement. This means that the same collection notification statement should only be used to the extent that the reasons for the collection, uses and disclosures of personal information by the entity are the same.
In addition, as part of the due diligence process, each entity will also need to ascertain whether it is presently disclosing or intending to disclose any personal information it holds outside of Australia to any third parties (such as a data hosting centre) or related bodies corporate. The APPs require an entity that discloses personal information outside of Australia to take reasonable steps to ensure that the overseas recipient, to whom the personal information is disclosed, does not breach the APPs.
There are exceptions to this requirement. If an entity does not fall within any of the exceptions prior to disclosing any personal information outside of Australia, the entity will be held to be liable for any breaches of the Privacy Act by the overseas recipients. This imposes considerable risk on Australian entities and steps should be taken to mitigate those risks.
Another significant change to the landscape of privacy law is in relation to direct marketing communications. The APP concerning direct marketing expressly prohibits the use or disclosure of personal information for the purposes of direct marketing. There are, however, exceptions to this prohibition. The main exceptions consider whether the individual would reasonably expect to receive direct marketing or has consented to receive the direct marketing, or whether it is impracticable to obtain consent.
The exceptions also require the direct marketing communication to provide a simple means by which the individual can opt out of receiving the communication. In relation to sending any direct marketing to an individual who has not provided their personal information (or consent) directly to the entity sending the direct marketing, the communication must also include a prominent statement drawing the individual’s attention to the fact that the individual can opt out of receiving such communication.
Entities will also be required to give individuals the option of not identifying themselves, or of using a pseudonym, when dealing with the organisation in relation to a particular matter unless it is impracticable for the entity to deal with individuals in this manner.
Significant changes have also been incorporated in relation to the credit reporting requirements under the Privacy Act. The changes to the credit reporting are complex. Specific advice should be sought by credit licensees in order to ascertain how these changes will affect them.
Failure to comply with the Privacy Act, after 12 March 2014, can result in penalties of up to $340,000 for individuals or up to $1.7 million for corporations.