Privacy is important, especially when it comes to your money. There are certain personal financial details Kiwis don’t want falling into the hands of hackers, or for that matter their partners, children, employers and others. Some things are just personal.

Most reputable Kiwi organisations do their best to stay within laws such as the Privacy Act, Human Rights Act, and others. However there are a whole heap of ways they can breach your privacy.

But first, you need to understand the concept of “authorised disclosure”. When you agree to the terms and conditions of all sorts of credit, which can include utility and mobile phone accounts not just loans, you usually agree to “authorised disclosure”, which means you allow your data to be shared in specific ways.

For example, when you take out insurance, the terms and conditions say that details of your claims can be lodged on an Insurance Claims Register, that other insurers can access and view. Another way you might authorise that disclosure is in the fine print of an employment contract.

Signing away your privacy

Some of the areas where you might want to consider your privacy include:

• Credit reports. Whenever you apply for credit you agree for certain aspects of your data to be shared with credit reporting agencies illion, Equifax, and Centrix. That date can be viewed by other lenders, employers and landlords. You have the right to view the private information held about you by these agencies and ask for it to be corrected. But you can’t get it deleted.  There is a Credit Reporting Privacy Code and if you think the credit reporter has been naughty you can complain to the Privacy Commissioner. Credit Simple isn’t a credit reporter but we’re owned by one – illion – and we’re careful to make sure we do all the right things.
• Insurance Claims Register. This register is run by the Insurance Council of New Zealand  and is designed to detect and prevents fraud, such as purposeful non-disclosure and double dipping. This is a little scary because if your name is flagged for fraud on the ICR it can be extremely difficult to get insurance of any kind, and as a result, take out a mortgage.
• Banks and finance companies. Banks know an awful lot about you and me. They know where you shop, how much money you earn, where you invest and sometimes even your net worth (how much you own or owe). Some of the most common issues (albeit rare) faced by bank customers often relate to ex-partners being given access to statements.

Real life privacy breaches

The Privacy Commission, Insurance & Financial Services Ombudsman (IFSO), and Banking Ombudsman, and other agencies hear cases related to breaches of individuals’ privacy. Some examples include:

• Put in harm’s way. A bank customer changed her name by deed poll to escape a violent relationship. The bank started sending her statements with her new name to the ex-partner. The Banking Ombudsman recommended the bank pay for the costs of the installation, maintenance and monitoring of a security alarm at her new address for three years, the costs of installation of security lighting and a fence for the woman’s property, which cost approximately $11,000.  The bank paid her an additional $4,000 for “inconvenience”.
• Sent to debt collectors. Financial organisations can disclose your information to a debt collector about a debt you owe. But where it’s disputed they need to tread carefully. The Privacy Commission cites the example of the Taylor v Orcon case. In this case telecommunications company Orcon failed to take reasonable steps to check the information and simply sent Mr Taylor’s bill to a debt collector despite the fact he had disputed it.  In that case the commission found Orcon was in breach of Principle 8 of the Privacy Act information.   Orcon’s actions resulted in Mr Taylor being declined credit and refused a tenancy.
• Blamed for her husband’s fraud. Mrs G complained to the IFSO because her name had been included in an alert on the Insurance Claims Register as a result of her husband’s fraud. She said it was unfair to have her name associated with the alert on the ICR, because she had nothing to do with the claim. Because it was a jointly held policy the alert could not be removed. “The policy stated that joint policyholders are deemed to act with the expressed authority of each other,” the Ombudsman noted.

It’s easy in the digital age to give too much information away voluntarily on social media as well. So guard your financial privacy well.

The post Are you signing away your privacy? Know your rights appeared first on Credit Simple NZ.

We love to hate insurance companies. But they do pay most claims. The trouble is that a lot of us don’t understand the basic concepts of how insurance works and we get caught by some mighty expensive fishhooks.

Imagine this scenario. You borrow mum’s car, but crash it while dropping a mate home. “No worries”, you say, “mum’s insurance will pay the claim”. The claim is declined because you breached your restricted licence by carrying a passenger. What are you going to say to mum about your little mistake, her written off car and the $10,000 damage you did to someone’s fancy fence? You’re probably facing bankruptcy in the eye.

That’s nowhere near all. There are many more insurance gotchas to beware of:

White lies

Your handbag is stolen. It’s expensive to replace the contents and you have a $200 excess. So you add a few extra things into the claim to cover it. The insurance company’s assessor or investigator spots something suspicious about your claim, because most of us are bad liars, and the company cancels the policy instead of paying out. If that’s not bad enough your name is added to the Insurance Claims Register as someone who has attempted fraud in the past, and you can never get insurance again even when you want to buy a house.

Criminal pasts

You, your son/daughter who live with you, partner or flatmate has a criminal past and it doesn’t occur to you to tell the insurance company. You may not even know about the convictions. None-the-less you’re not covered by your house contents insurance (or building cover if that conviction was for arson) unless you divulge this information. The insurance company’s argument is that it wouldn’t have offered you insurance at all or the rate it gave you if it had known that someone with said convictions was living with you.

Drink driving and other road misdemeanours

If you don’t update your motor insurance company on policy renewal date that you’ve been convicted of drink driving or other serious offences you won’t be covered for that Ferrari you just hit. It happens. Make sure you also tell your insurance company about lesser offences such as using a mobile phone whilst driving or speeding fines. Better safe than sorry.

Pre-existing conditions

“Help, my husband has had a heart attack. We need insurance fast.” I saw this posting on the Trade Me community forums. Insurance covers you for the unexpected, not what you already have when you take the policy out. Buy before you die, as some people say. This catches too many Kiwis out each year with income or mortgage protection policies, life, critical illness/trauma insurance and perhaps the most surprising, travel insurance. A travel policy doesn’t cover you for illnesses related to conditions you’ve had in the past unless you declare it and pay an extra premium. That includes precursors to illnesses. Even worse, if you want to cancel your holiday or fly back early because granny just died, you won’t be covered if she died of a pre-existing condition prior to you booking. This one really does surprise people.

Gradual damage

The floor collapses under your shower. “No worries, I’ll make an insurance claim”. The trouble here is that insurance covers you for sudden events, not a slow leak causing a rotten floor. Landlords often get caught out with gradual damage claims because their tenants fail to tell them about the dripping tap. Some insurance policies have limited “gradual damage” cover, but make sure you’ve got it and you understand the cover.

Other fish-hooks on the insurance long line to watch out for include, goods in storage, belongings in transit, unattended baggage, electrical breakdown or failure, jewellery or valuables not ‘carried on your person’, invited guests or tradespeople thieving, lying about who is the main driver, failing to tell the insurer that the house is let or has Airbnb or other guests, not declaring modifications to a vehicle even including flash paint jobs or mag wheels, and withholding information that previous claims have been declined or cover refused.

Finally, read your policy, read your policy, read your policy. And if you think you have been treated unfairly then complain to the Insurance & Financial Services Ombudsman or other complaints resolution service.

The post Insurance own-goals: Mistakes that lead to declined claims appeared first on Credit Simple NZ.

Credit is great. It means you can buy what you want right now! But before you get too excited, too many Kiwis get themselves in the doo-doo with their credit. You don’t want to be one of them.

Often it’s the people banks call ‘revolvers’ who get themselves into a complete debt disaster. These are the people who only make the minimum payment each month and see their debt spin out of control.

Sure you can go bankrupt or use the No Asset Procedure. But quite frankly you’d be better off if you never got yourself in that situation in the first place.

Understanding what can go wrong with your plastic fantastic approach to spending is a really good idea. You can learn some lessons from New Zealand’s Banking Ombudsman, whose job it is to ensure we all get treated fairly by our banks:

• Naughty you spending too much! So you think the bank’ll bail you out if you go on a spender bender? One Kiwi complained to the Ombudsman that the bank was irresponsible letting him borrow 20% over his credit limit and demanded that the bank to reimburse him for his own spending. He was lucky and the bank wiped his interest and agreed to an affordable repayment arrangement. But he didn’t get the debt wiped as he hoped.
• Dodgy shop debt disaster. “Mrs S” was two weeks into her five-week holiday when her credit card maxed out. She’d loaded extra cash on it before leaving New Zealand and couldn’t understand what had happened. It turned out she’d paid for purchases without actually checking what she was being charged. Even though the trusting Kiwi customer was the victim of a scam, she still had to pay the bank back it was her signature and she was the one to punch in her PIN. Other Kiwis have tried to get banks to refund money when they’ve been scammed. But mostly they fail. 
• Sexually transmitted debt. One of the worst credit disasters is one that you’re not even responsible for. Cupid’s arrow isn’t very smart sometimes and spenders fall in love with savers. The trouble is that as soon as you sign loan documents together you become responsible for your feckless partner’s debt. Watch what you’re signing. Mr B was long divorced when his ex-wife went bankrupt. He’d forgotten they had a joint credit card and it was never cancelled. As a result he was liable to repay his ex-wife’s debts.
• Going guarantor: When Kiwis sign guarantees for others they often forget about them. Often the fine print means that you’re responsible for all future borrowing by that person. Parents sometimes even have to cough up for their ex daughter or son-in-law’s debts long after the couple have split. 
• The bank helping itself. Banks can dip into money in your accounts. One Kiwi customer sold company assets because the business desperately needed cash. But he owed money on his credit cards the bank helped itself to sale proceeds to pay down the outstanding debt. This sometimes happens in personal lending as well, says Banking Ombudsman Nicola Sladden. The moral of this story is, if you’re in debt up to your neck, keep your cash in a separate bank.
• Goodbye insurance money. Another Kiwi bank helped itself to a customer’s insurance pay out for a $65,000 fire and applied it against his mortgage. The cash grab meant he didn’t have the money to rebuild. Sladden says people don’t realise that customers’ home loan agreements are worded so that the bank can go to the insurance company direct and take control of the proceeds.

Whew! Does that make you scared of credit yet? If these and other credit disasters fill you with horror, don’t put your credit card or overdraft away; you can become a master of your cards. Create a budget. It doesn’t need to be scary. Think of it as spending plan where you divvy up your pay each week, fortnight or month, so you know how much you can spend in each category and you pay a fixed amount off your debt. This really does work and over time you’ll be debt free. Do it. 

The post Debt disasters you didn’t see coming appeared first on Credit Simple NZ.

Touch wood you’ll still be able to do the limbo at parties in a decade or two. But every year a small but individually significant number of Kiwis find themselves temporarily or permanently disabled.

“She’ll be right,” many of us think. “ACC will pick up the tab and pay me out 80% of my salary for the rest of my life.” That’s not always the case. If you are prevented from working, i.e. disabled, through illness, you’ll only have minimal Work & Income benefits to fall back on.

Before you think that you’re 10 foot tall and bulletproof and that’ll never be you, look at the statistics. Losing an income temporarily or permanently through illness is exactly what happens to around 300 families a week in New Zealand, says the Financial Services Council. Many of these families are just weeks away from financial disaster when that happens because they don’t have an emergency fund.

What you need to know about ACC, illness, disability and insurance:

• ACC is a type of insurance. Although we all pay through work or other levies, few Kiwis realise that ACC is simply a government-run insurance company. For our premiums (i.e. levies) ACC guarantees to pay certain benefits if we’re injured or disabled by accident. Illnesses such as heart disease or cancer and degeneration such as worn out knees or hips aren’t covered.
• One million Kiwi households are at risk. Horizon Research found that only about 1 in 7 of New Zealand households has income protection insurance. There are nearly one million households in the country with incomes above $20,000 that could be vulnerable if a long-term illness stopped a major earner in the household from working.
• Disability through sickness isn’t covered. If you fall ill, ACC doesn’t pay. If you have it income protection insurance will pay a percentage of your income if you’re temporarily or permanently disabled through illness. Although half of adult New Zealanders have life insurance, very few have income protection insurance. Yet we’re statistically two-thirds more likely to be disabled by illness than accident. People who can’t afford income protection sometimes take out mortgage protection insurance, which is a cut-down form of income protection cover.
• Get lump sum cover. A little-known insurance called ‘trauma’ (aka ‘critical illness insurance’) pays a lump sum if you’re temporarily or permanently disabled by one of a long list of illnesses in the policy such as stroke, heart attack and cancer. This cover is often tacked onto life insurance for an extra premium.
• This isn’t something to think about when you get older. The younger you are, the more income you have to lose and years to support yourself.
• Consider ACC CoverPlus Extra if you’re self-employed. ACC’s weekly payments are only 80% of what you’ve declared to the Inland Revenue Department, which isn’t always enough to live on. And if you pay yourself dividends, then the earnings ACC bases its calculations on are nil. As a result some self-employed people choose to pay for CoverPlus Extra through ACC which allows them insure for a fixed weekly payment should they need it.
• ACC won’t pay you a weekly amount if you’re between jobs. This catches some. If you’re short-term unemployed or taking a sabbatical you could be up the proverbial creek if you have an accident during that time. ACC’s TimeOut policy is designed to cover this risk, for a premium. Or a regular disability or income protection policy with an agreed payout should pick this up – assuming you’ve taken the right cover.
• Beware of ACC gotchas. The ACC Act has a get-out clause for ‘injuries’ that it says are caused by ageing. ACC claimants’ sorry tales of being caught by this are common. If your ‘injury’ is deemed to be due to ageing, you could find yourself with only benefits, not the 80% payout you expected.

It can be a really good idea to seek advice from an insurance adviser, says independent consultant Des Wackenpumpen. “But do beware that advisers are paid in commission and all too frequently encourage clients to switch policies when they might be better off with the ones they have. Paying up front for advice rather than furtwangling around with ‘free’ information from commission-based advisers does away with this conflict of interest.”

The post Most Kiwis are just three weeks from disaster. Here’s the ins and outs of ACC and insurance appeared first on Credit Simple NZ.