Released every month our debt collection blog contains news, stories and tips to keep you informed.
A total of 278,683 Radio Rental leases that led to poor outcomes for consumers has resulted in ASIC pressuring parent company, Thorn Australia, to issue $19.9 million in refunds.
The action comes after ASIC filed proceedings in the Federal Court where ASIC proposed a $2 million penalty in addition to the $11.8 million the company has already refunded to affected consumers for not upholding responsible lending practices. A further $6.1 million will also need to be paid to cover refunds and defaults for 60,000 leases and potentially a further $200,000 more in costs to ASIC.
This is seperate to thet $50 million class action that was filed by law firm Maurice Blackburn in March 2017.
2 of the examples provided to the Federal Court of irresponsible lending include:
The State Penalities Enforcement Registry ("SPER") in Queensland are reporting that debts held by them are now in excess of $40 million in the last 12 months.
SPER reported a reduction of 7.5% in monies collected compared to this time last year ($275.2 million compared to $297.4 million) with many indicating the reduction was due to the widespread suspension of debt collection following the aftermath of Cyclone Debbie in 2017. The decline in collection of revenue was coupled with an addtional $39.174 million increase in debts held by SPER over the past 12 months with unpaid fines and tolls now totalling $1.211 billion as of 31/12/2017.
A spokeperson for SPER said, "If not for the cyclone’s impact SPER was on track to achieve collections to match its record of almost $300 million collected in 2015-16. The suspension lasted several months in some areas as communities worked to recover from the cyclone and subsequent flooding. Treasury has estimated collections for the 2017-18 financial year for SPER of $284 million, consistent with collections achieved in 2016-17. SPER takes a tailored approach, depending on the person’s entire debt history and circumstances, and selects the appropriate enforcement actions to recover the debt."
In response however, Opposition Treasury spokesperson, Tim Mander, said, "There are lots of people who unintentionally or accidentally get caught in the SPER process. We need to be focusing less on hassling those people and spend more time and effort going after the real fine dodgers. Information from last year shows SPER’s 100 largest debtors owing more than $17 million.”
Insured losses due to Cyclone Debbie were estimated by Insurance Council Australia at $1.3 billion with 47,000 claims being made and a total economic loss of $2.4 billion.
Source: The Courier Mail - January 2018
2 of the larger players in the 100% interest-free lines of credit, AfterPay and zipPay, have attracted the attention of Westpac with the bank warning their mortgage brokers that these payment schemes must be assessed as a liability when assessing a person's financial affairs.
AfterPay has more than 1.3 million customers in Australia and it's anticipated that annual sales will exceed $1.7 billion however a spokesperson for RateCity, Sally Tindall, said in a statement, “It’s easy credit for people who might not otherwise get a credit card and if you rack up a significant amount on these payments schemes it will have long-term repercussions if you can’t pay down the debt. The good thing is there are limits on AfterPay up to $1500 per transaction so there are sensible perimeters to help people pay it back, but if they put these payments on a credit card they can be hit by nasty interest rates.”
AfterPay Chief Executive, Nick Molner, said that a majority of their customers meet their repayments and pay-off their purchases without incurring any fees. He went on to say that 85% of AfterPay payments are made using a debit card and not a credit card.
Both AfterPay and zipPay offer customers the opportunity to order online or make a purchase in -store without providing any information regarding their financial position with charges only being incurred if the amount owing is not paid by the due date.
2017 again saw us publishing some interesting articles in the world of debt collection.
5. Legislative Amendments Passed by NSW Parliament
Our October 2017 article detailed the overall legislative changes that had been passed by NSW Parliament in September 2017 when it came to the legal enforcement of a debt in the Local Court of NSW.
4. Council Considers Home Repossessions
Bowen Council reported their attempts in which to recover $10 million in unpaid rates including commencing proceedings to seize properties.
3. ASIC Commenced Proceedings Against Credit Repair Business
In what appeared to be a trend in 2017 there were a number of proceedings commenced by ASIC against credit repair companies where false or misleading representations were made to consumers.
2. Equifax Acquires Veda for $2.5 Billion
In February 2017 we announced the deal between Equifax and Veda had been finalised after 5 years of negotiations.
1. Veda to Refund Customers After Privacy Rule Breach
Following on from our previous article we found that a series of complaints had been made by consumers where it was found that Veda had breached a series of privacy rules.
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