1.The Privacy Commissioner for Personal Data, Mr. Allan Chiang, announced findings of a public opinion survey which suggest that the students and the general public are against the Administration’s proposal (the Proposal) to share the negative credit data of defaulters with TransUnion (the only major consumer credit reference agency in Hong Kong) as a means to tackle the default problem under the non-means-tested loan schemes (NLS) administered by the Student Financial Assistance Agency. The survey was conducted in early February 2012 by an independent consultant and the Commissioner has submitted a copy of the survey report to the Administration as part of his submission responding to the Administration’s public consultation on improvement proposals on NLS.
(Click [www.pcpd.org.hk/english/files/infocentre/SFAA.pdf] to view the full version of the Commissioner's submission and the survey report [www.pcpd.org.hk/english/files/infocentre/SFAA_survey.pdf]).
2.“These findings come as no surprise in view of the grave privacy concerns implicit in the Proposal which I have brought to the attention of the Administration and the Legislative Council Panel on Education [see LC Paper No. CB(2)298/11-12(01) at www.legco.gov.hk/yr11-12/english/panels/ed/papers/ed1114cb2-298-1-e.pdf]”
Mr. Chiang said.
3. The privacy concerns are:-
(a)First, it is likely that the Proposal will open the floodgate of a closed system to requests of a similar nature from (i) other government departments for recovery of overdue taxes, government rents and rates, water charges, etc. and (ii) private sector sources such as retail, small business, telecoms, utilities and others which are also keen to recover outstanding debts from their customers.
(b)Secondly, the Proposal entails the transfer of the borrowers’ very private and sensitive data from a Government agency to TransUnion, a commercial enterprise which is not subject to the direct oversight of the Hong Kong Monetary Authority as the financial regulator. Importantly, TransUnion’s majority shareholder is not Hong-Kong based.
(c)Thirdly, it is important to note that TransUnion assigns a credit score to individual consumers based on the credit information held in its database but the computation of the score is proprietary and confidential information not to be disclosed to the consumers. In other words, whether the Proposal would produce an insignificant or a disproportionately negative effect on the borrower cannot be assessed.
4. “The survey actually identifies support for the Proposal from 60% of the respondents who have little or no knowledge of its privacy implications. However, after they have been informed of the privacy concerns, the percentage of respondents indicating support dropped to only 35%. A breakdown of these figures shows that the swing of views is in fact sharper for the general public (from 77% to 40%) than for the students (from 53% to 33%),” Mr. Chiang explained.
5. “I do not see the Proposal as the only option to deter default loans. Indeed, both the students and the public rated “expediting legal process to recover default loans” as definitely more effective than the Proposal and “using debt collection agency” and “heavier penalties against defaulters” as equally or slightly more effective than the Proposal,” Mr. Chiang added.
6. “I fully support the Administration’s determination to step up efforts to tackle the student loan problem. However, its proposal to share with TransUnion the negative data of defaulters in some 600 cases1 has serious privacy implications for the whole community and its deterrent effect is unknown due to the non-transparency of the operations of this credit reference agency. There are also clear indications that the students and the general public, with full knowledge of the privacy implications, are largely against the Proposal. I therefore recommend that the Administration should look for other less privacy-intrusive measures which could be equally if not more effective than the current proposal”, Mr. Chiang concluded.
7. “Separately, the Administration proposes to require the more mature first-time loan borrowers to submit credit reports (obtainable from TransUnion for a fee of $180). This in effect creates a pre-requisite requirement to assess the credit standing of the loan applicant and therefore begs the question as to whether the loan scheme is truly non-means tested. If the ability to repay a loan is not a significant criterion for the loan award, collection of the credit report from the applicant may be considered excessive data collection, thus contravening Data Protection Principle 1 under the Personal Data (Privacy) Ordinance,” Mr. Chiang supplemented.
1 It is understood that the Administration intends to restrict the application of the Proposal to the relatively more serious default cases, say, those with more than $100,000 in default and have ceased repayment for more than a year without any reasonable justification. There are about 600 cases which meet these criteria as at end of July 2011.
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