The latest debt collection news, stories and practical tips every month.
We are sad to announce that Carol has decided to move on from Collection Law Partners.
We wish her all the best in her pursuit in the practice area of Class Actions.
Mimi is still on board and we look forward to introducing a new team member shortly.
In a speech to the Financial Services Council Leaders Summit held in Sydney on 26/07, Minister for Revenue and Financial Services, Kelly O'Dwyer, announced the transition team tasked with the role of combining the existing External Dispute Resolution ("EDR") schemes.
Ms O'Dwyer said in a statement that the transition team would be led by former Reserve Bank Assistant Governor Dr Malcolm Edey. Dr Edy will lead the team with a view to have the new Australian Financial Complaints Authority ("AFCA") in place from 1 July 2018.
The AFCA will replace the "overlapping, inconsistent and narrower" system that includes the Financial Ombudsman Service ("FOS"), the Credit and Investments Ombudsman ("CIO") and the Superannuation Complaints Tribunal ("SCT"). Ms O'Dwyer went on to say, "It will [the AFCA] provide access to justice in a timely manner, with an independent arbiter and compensation where appropriate. It will make a real difference for those caught up in disputes with financial services providers".
The establishment of the AFCA was recommended following The Ramsey Review, conducted by Paul Ramsay of Melbourne University, however attracted criticism within the industry as there was a preference to favour consumer advocates and may not deliver fast and effective resolutions.
Ms O'Dwyer stated that because the AFCA was a central body for EDR that there will no longer be uncertainty or confusion about which body has jurisdiction to hear a particular dispute and that the central body will have the power to deal with multiple issues.
You can read the Final Report - Review of the Financial System External Dispute Resolution and Complaints Framework here.
In our December 2016 issue we covered in our blog the story of Centrelink issuing $650 million in debt notices. You can read this article here.
While there has been some noise in the local media since we first released this article, information obtained under Freedom of Information from the Administrative Appeals Tribunal ("AAT") indicates that one third of these Centrelink welfare debt recovery cases were appealed and are being overturned by the independent tribunal.
Of the 2,699 appeals lodged between March 2016 and March 2017, 960 debt decisions have been overturned with a further 132 varied. A spokesperson for the tribunal, who asked to remain anonymous said, "There's a lag time with the robo debts specifically … you’re looking at a minimum of six to eight months [until they appear in the tribunal]. We’re all suspecting that there is going to be some kind surge but it hasn’t come through yet."
A debt, according to Centrelink, may be overturned for several reasons including that the debt was calculated incorrectly or pursuing the debt would cause the recipient severe financial hardship. A varied decision can also indicate that the debt was calculated incorrectly or the debt was waived or set aside for the same reasons.
The Australian Council of Social Service's Chief Executive, Cassandra Goldie said, "We do not know how many of these were robo debt cases but our firm view is that, without human involvement in the detection and calculation of debts, mistakes will be made and there is a high risk that people will pay debts they do not owe. The government must only issue a debt notice if it has solid proof that a debt exists and that it is accurate. This is not the case under the robo debt program and is why it must be stopped immediately."
The Department of Human Services however indicated that during the Senate Inquiry that only a small number of the cases heard before the AAT related directly to the automated debt notices within only 106 people having lodged a request for review.
The Border Mail and subcontractors alliance, Subbies United, are reporting that losses are being incurred by subcontractors following non-payment by builders.
Some subcontractors are reporting losses dating back to 2013 with many owed over $10,000 by builders who simply refuse to answer calls demanding payment.
Rob Berry, a consultant to Subbies United, said in a statement, "For a long time the Victorian Building Authority has been the toothless tiger as a regulator. Builders can altogether fall off the planet and you’ve got to take legal action against the company. There’s no middle ground, you’ve got to take legal action or nothing." Mr Berry went on to say, "A lot of subbies wait cap in hand hoping the builder is going to pay. When they do go through the formal process they’ve lost a lot of time waiting and they might be beaten by the clock and when the sums are too big taking legal action can entrench the issue."
While the Victorian State Government established the Building & Construction Industry Security of Payment Act 2002 ("SOP Act") a glance at the flowchart provided by the Security of Payments Act website shows a complicated and lengthy process where it would appear that if precise time-frames are not followed that payment will not be forthcoming, or if amounts are too large, that individuals would need to commence legal proceedings in which to recover their debt.
Chief Executive of Master Builders Association Victoria, Radley de Silva, said, "Master Builders believes that the three months period contained in the security of payments laws is a generally sufficient window for a subcontractor to make a claim, considering that there will still exist traditional avenues to pursue any outstanding payments, such as through the courts."
Mr Berry went on to comment that he believes that a project bank account should be established to circumvent the builders having control of funds as is the standard in most OECD countries.
The Credit and Investments Ombudsman ("CIO") have released their statistics for the fourth quarter of 2016 / 2017.
CIO reported that in the fourth quarter 1,821 enquiries were received. This represents a decrease of 3.65% however complaints received rose from 1,564 from 1,518 representing a 2.94% increase.
Financial Service Provider ("FSPs") who received the most complaints were:
Having been located in North Sydney since 2006 LCollect will be moving to new premises in Ultimo on Friday, 18 August 2017 at 5pm.
As a result our online access will be temporarily unavailable from 5pm on this date however full service should be restored by Monday, 21 August 2017. With our move will come a significant boost in internet speed meaning a faster and more efficient online service for you as well as being more centrally located for our clients.
Our contact numbers will remain unchanged however we do ask that you note our new mailing address:
Level 1, Suite 101B 55 Mountain Street Ultimo NSW 2007
Please note also that we will be discontinuing our DX as there isn't an available facility in Ultimo.
Should you require any urgent assistance during this period please contact Philip Harvey, General Manager.
With the beginning of a new financial year we have received notification from Courts across Australia that there have been some changes in their filing fees.
Click on the appropriate State or Territory below to the fees payable and a basic workflow of the enforcement options available across each State and Territory:
If you require a more accurate quote as to the enforcement costs and options available to collect your debt please contact us.
The Australian Financial Security Authority ("AFSA") released their personal insolvency statistics for the 2016 - 2017 financial year and the June quarter 2017.
A summary of the statistics is below:
BANKRUPTCIES 2016-2017 FINANCIAL YEAR
Between 2009 and 2010 we have seen a drop in personal bankruptcies however 2015 and 2016 saw an increase of 0.2% New South Wales, Queensland and Victoria all saw falls in the last financial year with South Australia recording their lowest filing of personal bankruptcies for the fourth consecutive year.
Total Personal Insolvency Activity in Australia: % Change Compared to the Previous Financial Year
DEBT AGREEMENTS 2016-2017 FINANCIAL YEAR
Debt Agreement Proposals ("DAPs") were the highest level on record for the 2016-2017 financial year with some 13,597 being filed by individuals. This eclipsed the previous 2011-2012 financial year record with increases across all State and Territories except Tasmania.
QUARTERLY STATISTICS: JUNE QUARTER 2017
Total personal insolvencies decreased for the June quarter 2017 by 3.5% compared to the June quarter 2016. This decrease was limited entirely to personal bankruptcies alone which fell by 13.8%
In the June quarter 2017 3,888 bankruptcies were filed which is the lowest level of bankruptcies since the June quarter 2014 (3,857) however this was offset by the increase in DAPs which saw 3,670 filed in this quarter alone. DAPs reached new highs across New South Wales, South Australia and Queensland.
Bankruptcies in Australia: % Change Compared to Same Quarter in Previous Year
All quoted figures refer to personal administration under the Bankruptcy Act and not corporate insolvency.
The West Australian and 7 News Perth are reporting that over the last 2 years there has been a 33% increase in debt owed by public housing tenants.
The report indicates that both current and former tenants have incurred debt of more than $55 million for unpaid rent, water bills and repair bills. Current tenants are reported as owing as much as $9.6 million to the Department of Local Government and Communities with the average property being owed $1,540.
Housing Minister Peter Tinley said in a statement, "Only a small percentage of social housing tenants cause damage or are delinquent in rent or utilities payments. But I stress tenant debt is not usually caused by an isolated issue. The issue of tenant debt has its foundation in many associated problems — substance abuse, generational poverty and mental health issues may all play a part".
Service Delivery General Manager for Housing Authority Greg Cash stated that all debts were being pursued by the State Government and referred to debt collectors as required however Shelter WA spokesperson Stephen Hall said in a statement, "This raises the question of how public housing debts are currently raised, and the recovery processes that are available. Tenants who accrue debts ... usually do so on account of rent arrears, liabilities for cleaning and repairs, or both, at the end of the tenancy. The non-payment of rent is a breach of tenancy, and we frequently see sustainable tenancies being brought to an end by the landlord on account of rent arrears. In many cases, these arrears could be easily managed, and paid over time, if a more supportive approach that includes retaining the tenancy were pursued."
The increase in debt comes amid claims that tenants caused $160,000 damage to a property in Moora, WA and 3 properties in Karratha sustaining damage between $45,000 and $50,000 each.