regulatory changes announced, but legislative reform still needed

In response to Australia’s biggest ever data breach, the federal government will temporarily suspend regulations that stop telcos sharing customer information with third parties.

It’s a necessary step to deal with the threat of identify theft faced by 10 million current and former Optus customers. It will allow Optus to work with banks and government agencies to detect and prevent the fraudulent use of their data.

But it’s still only a remedial measure, intended to be in place for 12 months. More substantive reform is needed to tighten Australia’s loose approach to data privacy and protection.

Read more: A class action against Optus could easily be Australia's biggest: here's what is involved

Changing regulations, not legislation

The changes – announced by Treasurer Jim Chalmers and Federal Communications Minister Michelle Rowland – involve amending the Telecommunications Regulation 2021.

This a piece of “subordinate” or “delegated law” to the Telecommunications Act 1997. Amending the act itself would require a vote of parliament. Regulations can be amended at the government’s discretion.

Under the Telecommunications Act it is a criminal offence for telcos to share information about “the affairs or personal particulars of another person”.

The only exceptions are sharing information with the National Relay Service (which enables those with hearing or speech disabilities to communicate by phone), to “authorised research entities” such as universities, public health agencies or electoral commissions, or to police and intelligence agencies with a warrant.

That means Optus can’t tell banks or even government agencies set up to prevent identity fraud, such as the little-known Australian Financial Crime Exchange, who the affected customers are.

Important safeguards

The government says the changes will only allow the sharing of “approved government identifier information” – driver’s licences, Medicare and passport numbers.

This information can only be shared with government agencies or financial institutions regulated by the Australian Prudential Regulatory Authority. This means Optus (or any other telco) won’t be able to share information with the Australian branches of foreign banks.

Financial institutions will also have to meet strict requirements about secure methods for transferring and storing personal information shared with them, and make undertakings to the Australian Competition and Consumer Commission (which can be enforced in court).

The information can be shared only “for the sole purposes of preventing or responding to cybersecurity incidents, fraud, scam activity or identify theft”. Any entity receiving information must destroy it after using it for this purpose.

These are incredibly important safeguards given the current lack of limits on how long companies can keep identity data.

Read more: Optus says it needed to keep identity data for six years. But did it really?

What is needed now

Although temporary, these changes could be a game changer. For the next 12 months, at least, Optus (and possibly other telcos) will be able to proactively share customer information with banks to prevent cybersecurity, fraud, scams and identity theft.

It could potentially enable a crackdown on scams that affect both banks and telcos – such as fraudulent texts and phone calls.

But this does not nullify the need for a larger legislative reform agenda.

Australia’s data privacy laws and regulations should put limits on how much data companies can collect, or for how long they can keep that information. Without limits, companies will continue to collect and store much more personal information than they need.

Read more: What do TikTok, Bunnings, eBay and Netflix have in common? They’re all hyper-collectors

This will require amending the federal Privacy Act – subject to a government review now nearing three years in length. There should be limits on what data companies can retain, and how long, as well as bigger penalties for non-compliance.

We all need to take data privacy more seriously.