The Insurance Council of Australia (ICA) has raised three significant concerns about the Federal Government’s privacy reform legislation, which is before Parliament.

In its submission to the Senate committee reviewing the Privacy Amendment (Enhancing Privacy Protection) Bill, ICA says it is “extremely concerned” that providers of lenders’ mortgage insurance (LMI) will be unnecessarily restricted in their ability to access borrowers’ credit history through credit reporting bodies that provide such information.

ICA says lenders’ mortgage insurers “take on the same risk as lenders” and require similar access to credit histories to be able to provide their services efficiently.

Such information is “fundamental to the business model of an LMI provider”, and without proper access credit availability could be affected, particularly for first homebuyers, the submission says.

ICA also wants the transition period for the new legislation to be increased from nine months to 18 months or more to correspond with the industry’s normal business flow and recent legislative changes.

The industry typically revises product disclosure statements every 12-18 months. New requirements – such as adopting a standard definition for flood and key fact sheets for home and contents policies to be introduced over the next two years – will also necessitate changes to product disclosure statements.

The submission says creating new statements is expensive and ICA’s previous preference for an 18-month transition period may be inadequate in light of the new legislative requirements.

“Our members may have to apply for regulatory relief to give them additional time to make the required changes,” the submission says.

ICA also expresses concern that the legislation does not provide sufficient certainty that the new Australian Privacy Principles “do not apply retrospectively”.

The submission says that while the legislation appears to mean that its provisions apply only to new data collected following its introduction, there is a lack of clarity about “certain privacy principles” in such areas as direct marketing and cross-border disclosure.

“In view of the vast amount of personal information held under the current privacy regime, it would be impractical to expect that existing data holdings will be reprocessed to a standard – for example in relation to consent – that did not exist at the time the information was initially collected.”

ICA wants the legislation clarified through accompanying regulation. Where any prospect of retrospectivity remains, exemptions should be provided “in respect of existing customers and information (including for third parties) already held in compliance with the National Privacy Principles”.

Senate and House of Representatives committees reviewing the legislation are expected to report back next month, and the Federal Government hopes to pass the legislation before the end of the year.

The reforms will provide a single set of national privacy standards, replacing separate standards for the public and private sectors.