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The latest debt collection news, stories and practical tips every month.

Government Rejects Robo-Debt Inquiry Findings

Monday, October 30, 2017 - Posted by Michael McCulloch

Following the inquiry into the "robo-debt" program the Australian Government is refusing to suspend the system while at the same time sending letters to those already impacted, adivsing them that they can ask for their debt to be reviewed.

In June 2017 both the Labor and Greens argued that the system should be put on hold until the system could be drastically overhauled with the Commonwealth Ombudsman initially indicating that approximately 20% of debts issued did not need to be paid back. Those who wanted to challenge the debt have claimed that they had difficulty in contacting Centrelink with the agency reporting that they missed 42 million calls in the last financial year (around 140,000 calls per day).

In a response to the inquiry, which was released on 10/10/17 the Government said it acknowledged that there had been "communication issues" with the robo-debt system that "gave rise to potential confusion on the part of some recipients". A spokesperson for the Government went on to say, "There is no evidence to support the recommendation to put on hold the online system. The government's clear position ... is that it is appropriate to ask people for information when there are differences between their income details held by the Department of Human Services and other third parties such as the Australian Taxation Office."

Greens Senator, Rachel Stewart, who served on the committee, said in a statement, "The people who gave evidence at the inquiry were vulnerable people, whose data had been automatically matched without oversight; people who had been harassed by debt collectors days before Christmas; people living below the poverty line wrongly told they only had a number of weeks to pay back thousands of dollars. We know that this debt collection process impacted on the mental health of many people. This government response shows a government deeply out of touch with people dependent on our social safety net."

The Government have since indicated that those that received an initial letter will now get a further letter advising of the debt and reminding them of their review rights before being contacted by a debt collector, employed by the Department of Human Services, who will also remind them of their review rights.

Source: BuzzFeedNews - October 2017


FOS Annual Review 2016-17

Monday, October 30, 2017 - Posted by Michael McCulloch

New data released by FOS on 05/10/17 indicates that a record number of disputes were received in 2016-2017. The review shows that FOS received 39,479 disputes (a 16% increase from last year) with the increase predominantly driven by continued growth in insurance disputes. The number of insurance disputes increased approximately 38% during this period alone. FOS have said that this increase was due to a continuation of industry-specific issues including high claim numbers, organisational changes and the impact of Cyclone Debbie, all of which may have impacted upon the insurers' internal dispute resolution process.

Overall FOS claim that in 2016-2017 that the average time taken in which to resolve a dispute has reduced by 13% and a reduction of 43% from the previous year "without compromising the quality of outcomes". Chief Ombudsman, Shane Tregillis, said in a statement, "This means that people can have their cases resolved more quickly and get on with the rest of their lives."

Of the 39,479 disputes received by FOS 22,475 were accepted with 17,004 referred back to the Credit Provider as being outside of the FOS Terms of Reference. Of the 22,475 disputes received:

  • 10,973 credit disputes
  • 8,756 general insurance disputes
  • 1,861 deposit-taking disputes
  • 1,331 payment system disputes
  • 1,292 investments and advice disputes
  • 1,018 life insurance disputes
Of the credit disputes received 33% involved credit cards, 24% involved home loan and 20% related to personal loan products. Of all disputes received credit cards accounted for 14%, home loans 10% and personal loans 8%. Of all disputed involved 41% involved banks which was lower proportionally to 2015-2016 (46%)

According to the Financial Ombudsman Service ("FOS"), the Bank of Queensland ("BoQ") is the worst offender for disputes when it comes to home loans.

For every 100,000 mortgages across Australia, BoQ was involved in 79 disputes during the last financial year. 40% were resolved by agreement between the parties while a further 29% were found in BoQs favour according to FOS.

A BoQ spokesperson said, "BoQ is dedicated to ensuring our customers' needs are properly met and has some of the highest industry standards in place to ensure we meet responsible lending requirements. Importantly, FOS has either found in favour of BoQ or the action was discontinued in about 45% of cases."



Best Practice Guide to Process Serving

Monday, October 30, 2017 - Posted by Michael McCulloch

It has been recently reported in the media that the sport scientist behind that Essendon AFL supplement program, Stephen Dank, has been declared bankrupt over a debt of almost $100,00 owing to a failed agribusiness.

A subsidiary of Bendigo and Adelaide Bank commenced the proceedings after a loan taken out in 2006 collapsed. It is alleged that Mr Dank ignored several deadlines to pay and was subsequently put under surveillance by agents in Melbourne and Sydney following attempts in which to serve Mr Dank with a Bankruptcy Notice. With a Bankruptcy Notice requiring personal service the Creditor incurred a significant amount in costs in surveillance and service fees with the Federal Circuit Court approving costs against Mr Dank of more than $12,000. You can read that article here.

While we will not cover the various methods of service required to serve legal documents in this blog we can report that the Institute of Mercantile Agents ("IMA"), the peak body of Australian debt collectors, have recently released a best practice guide for process serving which goes on to explain the "needs to be considered and addressed by those wanting to achieve best practice standards in the Process Serving Sector".

You can download a copy from our website via this link.

Source: IMA Best Practice Guides - October 2017
Source: The Age - October 2017


Who Do Debt Collection Guidelines Apply To?

Monday, October 30, 2017 - Posted by Michael McCulloch

Originally released in October 2005, by the Australian Competition & Consumer Commission ("ACCC") and the Australian Securities and Investments Commission ("ASIC"), the Debt Collection Guidelines for Collectors and Creditors was jointly produced to ensure that debt collection activity is undertaken in a way that is consistent with consumer protection laws.

The guidelines apply to not only Mercantile Agents (debt collection agencies) and Commercial Agents (process servers, repossession agents, etc) but to anyone that is employed, directly or indirectly, by a business or individual to make a demand for payment of a debt. This includes collection officers, accounts receivables clerks and credit managers.

Page 1 of the guidelines state:

WHO IS THIS GUIDELINE FOR?


This guideline will help you to understand how the Commonwealth consumer protection laws apply to you if you are a:

  • Debt collector (including a debt collection agency, debt buy-out service, in-house collection department of a business or Government agency, Solicitor and other)
  • Creditor who uses external collection agencies to collect debts or sells or assigns debts to third parties

This guideline applies to both Creditors who are directly involved in debt collection and to specialist external agencies who provide debt collection services. When a Creditor uses an agent for collection, the Creditor (as principal) will generally be liable for their agent's conduct when that conduct comes within the agent's express, implied or ostensible authority.

Key points from the guideline include:

  • Clearly identifying yourself when making contact with a debtor
  • That you are entitled to make reasonable inquiries when a debtor advises he or she is not able to pay
  • That you should never disclose any information about the debtor or their debt to an unauthorised 3rd party
  • That telephone contact should be made during reasonable hours of the day (Monday to Friday - 7.30am to 9.00pm | Weekends - 9.00am to 9.00pm)
  • Avoiding contact with a debtor via a method that he or she has specifically requested not be used
  • That contact should be free of intimidation or humiliation
  • If a debtor has introduced a 3rd party representative that communication with this authorised representative should continue unless the 3rd party does not have instructions from the debtor or the 3rd party fails to respond to communications from you
  • Evidence of the debt should be presented upon request
  • That you must be cautious about making representations about the consequences of non-payment or the legal status of the debt

You can download a copy of the most recent via this link.

Equifax Data Breach

Monday, October 30, 2017 - Posted by Michael McCulloch

Equifax, one of the 3 largest credit reporting agencies in the US has revealed that between mid May 2017 and July 2017 that they were subject to a security breach.

The personal data of 143 million US customers was exposed with names, addresses, dates of birth and social security numbers leaked. The initial breach was first reported in March 2017 however during the May 2017 and July 2017 period hackers ransacked vast troves of information. Much remains unknown about the attack with security experts and Equifax now focusing on what the company did or didn't do in the lead up to the attack including their response to the original flaw found by Cisco.

Since the hack more than 11.5 million Americans have signed up for credit monitoring while others have frozen their credit reports with not only Equifax but also their rivals TransUnion and Experian.

Equifax have since disclosed that following the breach approximately 209,000 customers had credit card numbers stolen. Those credit card numbers are likely those who had previously purchased the credit monitoring service provided by Equifax in the hope of securing an additional layer of protection from fraud. Equifax have said in their latest report that it is regularly the target of cyber threats and has made substantial investments in security measures.

The breach is now subject to a federal investigation.

Source: PBS - 3 October 2017


OAIC Introduces New NDB Scheme

Monday, October 30, 2017 - Posted by Michael McCulloch

The Office of the Australian Information Commissioner ("OAIC") has recently published new draft resources for the Notifiable Data Breaches ("NDB") scheme which commences on 22 February 2018.

The resources include:

  • Assessing a suspected data breach;
  • What to include in an eligible data breach statement;
  • New online forms to assist organisations in preparing a statement about an eligible breach to the OAIC; and
  • A new chapter in the OAIC's Guide to Privacy Regulatory Action on data breach incidents.

The NDB obligations apply to business, the Australian Government and other organisations already bound by the Privacy Act to keep information secure. Generally, small businesses with a turnover of less than $3 million will not have any obligations under the scheme.

Feedback can be provided to the OAIC regarding the draft changes via email consultation@oaic.gov.au before 23 October 2017.

Source: www.oaic.gov.au - 29 September 2017

Legislative Amendments Passed by NSW Parliament

Monday, October 30, 2017 - Posted by Michael McCulloch

In our September 2016 and December 2016 editions of Debt Collection News we reported that the NSW State Government were introducing several changes to the debt collection industry in NSW.

You can read these articles here and here.

We have now been advised by the NSW Debt Recovery Working Group ("DRWG") that as part of the overall changes being made several legislative amendments were passed by NSW Parliament on 20 September 2017. These legislative amendments include:

1. To bring the items protected from seizure under a Writ for Levy of Property in line with the items protected under the Bankruptcy Act;

2. To provide the Office of the Sheriff discretion when exercising their power to execute a Writ for Levy of Property where the cost of seizing, removing, storing and selling the seized property will likely exceed the total sale price;

3. To further codify the Office of the Sheriff's practice of sending a letter to the debtor before attempting execution of a Writ for Levy of Property;

4. To ensure that where a Garnishee Order for Debts is issued that the onus is on the financial institution issued with the Order to leave a minimum balance that aligns with the net weekly compensation amount (the same amount currently protected under a Garnishee Order for Wages or Salary); and

5. To clarify that the Local Court of NSW has the power to vary or suspend a Garnishee Order.

Department of Justice have advised that item 1 will commence within 3 months from the date of the legislation passing to ensure that the Office of the Sheriff have sufficient guidance and training material and items 4 and 5 will commence at a later date to allow the financial sector sufficient time to make changes to their internal procedures and processes. The remaining items have come into force immediately.

The relevant amendments to the Justice Legislation Amendment Bill (No 2) 2017 can be read online.

New CLP Team Members

Friday, September 29, 2017 - Posted by Philip Harvey

Collection Law Partners is pleased to welcome aboard both Hanna Aili and Moussa Mourad and  as paralegals to the law firm.

Hanna is in the office on Monday, Tuesday, and Moussa is in the office Wednesday, Thursday and Friday. 

Both are looking forward getting to know all our clients.


Banks Agree to Eliminate Unfair Contract Terms

Thursday, September 28, 2017 - Posted by Michael McCulloch

In our March 2017 edition we released a blog article Bank Lenders Must Meet Unfair Contract Laws.

The Australian Securities & Investments Commission ("ASIC") have now reported by media release on Thursday, 24 August 2017 that National Australia Bank, Commonwealth Bank of Australia, Australian and New Zealand Banking Group (ANZ) and Westpac Banking Corporation have now agreed to specific changes to eliminate unfair terms from their Contracts.

The changes mean that:

  • The loan documents will not contain 'entire agreement clauses' that absolve the bank from responsibility for conduct, statements or representations they make to borrowers outside the written contract.
  • The operation of the banks' indemnification clauses will be significantly limited. For example, the banks will now not be able to require their small business customers to cover losses, costs and expenses incurred due to the fraud, negligence or wilful misconduct of the bank, its employees or a receiver appointed by the bank.
  • Clauses which gave banks the power to call in a default for an unspecified negative change in the circumstances of the small business customer (known as 'material adverse change event' clauses) have been removed – so that the banks will now not have the power to terminate the loan for an unspecified negative change in the circumstances of the customer.
  • Banks have restricted their ability to vary contracts to specific circumstances, and where such a variation would cause a customer to want to exit the contract, the banks will provide a period of between 30 and 90 days for the consumer to do so.

The banks have agreed that any customer who entered into a Contract from November 2016 will be protected by the changes introduced by ASIC with ASIC also indicating that they will conduct regular audits to ensure compliance.

In a statement to the media ASIC Deputy Chair, Peter Kell, said, "ASIC welcomes the significant improvements made by the banks to their small business lending agreements. The improvements have raised small business lending standards and provide important protections for small business customers. ASIC will be following up with other lenders to ensure that their small business contracts do not contain unfair terms, and we will continue to work with the ASBFEO on these issues".

At this point in time ASIC have indicated that they will also conduct a further review in the coming months so that other lenders to small business can consider their position and whether changes to their Contracts may be required in the near future.


Car Repossession Gone Wrong

Thursday, September 28, 2017 - Posted by Michael McCulloch

In Compton, a city in the south of California, a repossession has gone dramatically wrong.

Footage posted on Facebook shows a man riding a tow truck bashing at the windows after his car was repossessed. In the video the man can be seen bashing at the window of the tow truck while the vehicle is literally dragged along the road. Footage of the original repossession has not been posted online however reports are that the incident occurred over a stretch of approximately 18 kilometres.

The Sheriff's department said in a statement to the media, "The tow truck driver noticed the owner of the vehicle riding on the back of the tow truck, holding a crow bar, and shattering the tow truck’s rear window".

While the tow truck was damaged no one has been arrested and charged.

Source: Press Telegram - Wild Video Shows Compton to Long Beach Car Repossession Gone Bad



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