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Debt Collection News

Released every month our debt collection blog contains news, stories and tips to keep you informed.

Recovering Debt Collection Costs

Tuesday, February 27, 2018 - Posted by Michael McCulloch

A water utility supplier in Queensland brings to the light the issue of attempting to recover debt collection charges from customers.

Queensland Urban Utilities have recently come under regulatory scrutiny after they were found to be charging a debt collection fee on their overdue debts. It is reported in the Courier Mail that they are currently clarifying their legal position but in the meantime will reimburse or fogive $180,000 in debt collection fees.

The Queensland Debt Collectors (Field Agents and Collection Agents) Act 2014 forbids the collection of debt collection costs -

s27 Recovery of Costs of Debt Collector
(1) A person must not recover or attempt to recover from a debtor the costs or expenses of a debt collector for performing a debt collection activity or a repossession activity.

(2) Subsection (1) does not apply to prevent a person who appoints a debt collector to repossess goods or chattels from a debtor from recovering the debt collector’s costs and expenses if the person has a right under an agreement with the debtor or otherwise to recover the costs or expenses.

(3) Costs or expenses recovered in contravention of this section may be recovered by the debtor as a debt.

(4) This section applies subject to the National Credit Code in schedule 1 of the National Consumer Credit Protection Act 2009 (Cwlth) .

(5) In this section— 
"costs" do not include—
(a) stamp duty; or
(b) legal costs fixed by, or payable under, rules of court or a court order.
"debtor" includes a person from whom goods or chattels may be lawfully repossessed.

Similar legislation applies in New South Wales and Victoria under the NSW Commercial Agents and Private Inquiry Agents Act 2004 and Australian Consumer Law and Fair Trading Act 2012:

NSW Commercial Agents and Private Inquiry Agents Act 2004

s19 Licensee Not to Charge Debtor for Expenses of Debt Collecting

(1) A licensee must not request, demand or collect from a person (the "debtor" ) any payment for the costs or expenses incurred by the licensee in connection with the collection from that person of money due under a debt.

(2) Any money received from the debtor by a licensee in contravention of subsection (1) may be recovered by the debtor from the licensee, as a debt, in any court of competent jurisdiction.

(3) This section does not limit any right that the person to whom the debt is payable (the "creditor" ) may have at law with respect to the recovery from the debtor of the creditor's costs in recovering the debt.

Australian Consumer Law and Fair Trading Act 2012
s52 Offence to Charge Debtor for Cost of Debt Collection

(1) A debt collector must not recover, or attempt to recover, from a debtor any remuneration or payment in connection with the collection of a debt including the costs and expenses of a debt collector for—
(a) finding or attempting to find goods or chattels of the debtor;
(b) repossessing or attempting to repossess goods or chattels from the debtor;
(c) collecting or attempting to collect a debt owed by the debtor.

(2) Subsection (1) does not apply in respect of a debt collector who is recovering or attempting to recover on behalf of a creditor enforcement expenses reasonably incurred by that creditor—
(a) if a credit contract allows the recovery of those expenses; or
See section 107 of the National Credit Code.
(b) in the case of a debt that was not wholly or predominately accrued in connection with personal, domestic or household purposes, if a term of an agreement between the creditor and the debtor permits the recovery of those expenses.

(3) It is a defence for an offence against subsection (1) that the debt collector had an honest and reasonable belief that the enforcement expenses that he or she was recovering or attempting to recover did not exceed those reasonably incurred by the creditor.

(4) Any costs or expenses recovered in contravention of subsection (1)—
(a) may be recovered by the debtor as a debt; and
(b) if the debt collector is the creditor—
(i) may be set off against the debt; or
(ii) may be recovered by the debtor from the debt collector or the creditor.

(5) In this section—
"costs" do not include—
(a) stamp duty; or
(b) legal costs fixed by, or payable under, rules of court or a court order;
credit contract has the meaning given by section 4 of the National Credit Code;

"creditor" includes a partner, employer, employee, principal or agent of the creditor or a person who is in any way acting in collusion with the creditor;
"debt collector" means a person who engages in debt collection—
(a) as a principal or agent;
(b) as an employee of a principal or agent in exchange for salary, wages or commission;
"debtor" includes a person from whom goods or chattels may be lawfully repossessed.

For further reading we refer you to ACCC v Sampson [2011] FCA 1165.

The ACCC has previously written to agencies and Solicitors who act in the debt collection industry reminding them:

  1. If something is only a possible consequence of not paying a debt, you must ensure that you do not create an impression that it is a definite consequence
  2. Before asserting the right to payment of administrative and or legal costs you must ensure that you are aware of whether or not there is a legal entitlement to claim any such costs
  3. You cannot create an impression that a debt collection letter, demand or notice are documents which have been authorised by a Court or able to be filed with a Court.
For further clarification regarding the contents of this article or to have your Terms and Conditions reviewed so reasonable debt collection fees and charges may be collected please contact Collection Law Partners to discuss your requirements.

Disclaimer: This article is general information only and does not constitute legal advice and is not intended to be relied on in any way.

Comcare Increase Attempts To Recoup Overpayments

Tuesday, February 27, 2018 - Posted by Michael McCulloch

Comcare, a statutory authority of the Australian Federal Government as the insurer, regulator and scheme manager of the Work Health and Safety Act 2011 and the Abestos-Related Claims (Management of Commonwealth Liabilities) Act 2005, has allegedly increased their attempts to recoup payments for cases it previously accepted liability for.

Figures released to a Senate committee show an increase in overpayment letters being issued by 77% for the 2014 to 2017 period. Comcare has claimed that there has been no change in approach or policy that has led to the increase of the overpayment letters and claims that it is not clear if the increase in claims has impacted upon the figures. The agency did claim that while there may have been an increase in overpayment letters being issued that a record number of debts are also being waived or written-off. 

Manager for Slater & Gordon's Comcare team, Abraham Ghaleb, said, "It's absolutely terrifying for people and it's an abhorrent behaviour for a Commonwealth department. When I'm getting the evidence together [the prospect of an overpayment claim] always has to be in the forefront of my mind, 'is this a potential argument that Comcare will raise?' and 'how do I deal with it?"

Comcare has rejected any suggestion and improper behaviour and said in a statement, "Case reviews and debt recovery have had little impact on the Comcare scheme's financial position. The scheme achieved full funding (100 per cent ratio of assets to liabilities) in 2016-17 for the first time in seven years. The biggest drivers of this recovery were sustained reductions in new claims, a strong focus on early intervention and better return to work outcomes."

Source: The Canberra Times - February 2018

Small Business Face Bankruptcy For Data Breaches

Tuesday, February 27, 2018 - Posted by Michael McCulloch

With the new cyber data breach notifications having come into effect from 22 February a study by Xpotentia shows that up to 124,000 businesses over the $3 million threshold are not ready for the new rules.

Businesses with an annual turnover of more than $3 million that trade in personal information must notify affected individuals of any data breach that is likely to result in "serious harm". The business must also inform the Office of the Australian Information Commissioner ("OAIC"). A failure to comply may incur penalties of up to $420,000 for an individual and $2.1 million for companies which has triggered warnings that a failure to notify the OAIC could result in some businesses being made bankrupt.

The Xpotentia study noted a significant number of data breaches over the years with a survey in 2017 by Telstra showing 59% of Australian companies had detected a data security breach on a monthly basis. The study also showed that 1 in 4 Australians were targeted by hackers last year with almost 50,000 Australians and 5,000 public servants from the Department of Finance, the AEC and NDIS all having data exposed after a security breach by a private contractor.

Xpetentia Managing Director, Sorina Toma said of many small businesses, "They might actually have their entire customer data base on a simple PC. You are talking about ¬≠businesses that employ 10 to 12 people and they have a few computers and they are totally exposed. A lot of the time, a small business might not know a breach has happened". Mr Toma recommended that many small businesses look at securing their data with additional software and hardware such as firewalls and encouraged business owners to invest in a chief information security officer to identify threats and vulnerabilities.

Cyber Security Minister, Angus Taylor, said, "Not knowing how to protect client or customer data is becoming a poor excuse. There is a lot of information now available on cyber sec¬≠urity. The onus is with business operators, with organisations and with government agencies, to put measures in place to reduce the risk of data breaches.”

Learn more about the changes, preparation and response at Data Breach Preparation and Response - A Guide to Managing Data Breaches in Accordance with the Privacy Act 1988.

Source: The Australian - February 2018

AFCA Given Green Light

Tuesday, February 27, 2018 - Posted by Michael McCulloch

In our May 2017 edition of Debt Collection News we reported of the Consultation Paper Released On New EDR Scheme.

Earlier this month ASIC released confirmation that the Bill to establish the Australian Financial Complaints Authority ("AFCA") was passed through parliament with AFCA set to replace the Credit and Investments Ombudsman ("COSL"), the Financial Ombudsman Service ("FOS") and the Superannuation Complaints Tribunal ("SCT"). According to the ASIC media release, ASIC will work with the Government and new scheme stakeholders to ensure that the transition is as smooth as possible. In the interim ASIC has confirmed that they will retain direct oversight of both COSL and FOS with seperate arrangements being made for the ongoing operation of SCT.

According to the media release:

  • AFCA will start accepting complaints no later than 1 November 2018
  • The operator of the scheme will be authorised by the Minister, and the scheme will be subject to ongoing oversight by ASIC.
  • In order to maintain access to external dispute resolution for consumers in the lead up to commencement of AFCA, ASIC will monitor member compliance with existing EDR scheme requirements as well as the effectiveness of scheme operations.
  • Members of each of CIO and FOS - including licensees and credit representatives - must continue to maintain their EDR membership through this period, including paying membership and other scheme fees in full as required. ASIC has asked the two schemes to report any failure of members to do so.
  • A memorandum of understanding between CIO and FOS will prevent members inappropriately moving between the schemes in the transition period.
  • ASIC will be consulting soon on updated Regulatory Guide 139 (REG 139), which will set out details of ASIC's oversight of AFCA.  This will be finalised and published when AFCA commences operations.
  • ASIC will also publicly consult on new IDR standards and the mandatory IDR reporting requirements that are also contained in the AFCA Bill – but this consultation will not take place until afterAFCA commencement.
  • Current legislative IDR requirements for superannuation trustees and retirement savings account providers (including 90-day timeframes and requirements for written reasons) will continue to apply in their current form until ASIC consults on and then issues updated IDR policy (RG 165).

ASIC Depity Chair, Peter Kell, said, "Fair, timely and effective dispute resolution is a cornerstone of the financial services consumer protection framework. The combination of firms' internal dispute resolution procedures and access to a free independent external scheme currently provides redress for many tens of thousands of Australians each year. Strengthening these dispute resolution requirements will help deliver higher standards and better outcomes in the financial services market."

"The establishment of a single scheme for all financial services and superannuation complaints is a very positive development, building on the outcomes achieved over many years by the existing three schemes: the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal."

We will continue to monitor these changes and will release our updated guide once the new IDR standards are made available.

Attorney General Seeks Debt Agreement Reform

Tuesday, February 27, 2018 - Posted by Michael McCulloch

Attorney-General, Christian Porter, has recently said in a statement that the use of Debt Agreement Proposals ("DAPs") to avoid bankruptcy is in need of reform.

The number of DAPs filed increased from 6,500 in 2007 to 12,640 in 2017 (an increase of 48.58% or nearly 5% per annum) with bankruptcies during the same period decreasing almost 10,000 per year.

The reforms currently being discussed include introducing new payment-to-income ratios and doubling the asset threshold at which debtors can acess a DAP. Mr Porter said following the introduction of the legislation to the House of Representatives that this was the 1st major reform since 2007 and was in direct response to DAPs providers exploiting consumers. Mr Porter said in a statement, "It will boost confidence in the professionalism of debt agreement administrators, deter unscrupulous practices and enhance transparency. Secondly we are bolstering the authority of the official receiver in bankruptcy to intervene in exceptional cases and refuse to accept debt agreement proposals which would cause undue financial hardship to vulnerable debtors".

Should the legislation be passed through Parliament the debt agreement industry would have 6 months in which to implement any of the proposed changes.

Source: 9 News - February 2018

Unpaid Ambulance Bills to Debt Collectors

Tuesday, February 27, 2018 - Posted by Michael McCulloch

A recent study from has revealed that almost 25% of Australians believe that ambulance services are free.

While Queenslanders and Tasmanians enjoy a free service other States come at a cost and may not ben covered by health insurance. The cost varies across each State and Territory with some costs determined by location and whether or not the incident is deemed an emergency or not with most subsidised by State Governments.

Data from Revenue NSW shows that Sydneysiders alone owe more than $20 million for emergency callouts between July 2015 and January 2018 with a significant number of debts now being referred to debt collectors to follow-up for immediate payment. In NSW patients are charged a callout fee of $372 plus an additional charge of $3.35 per kilometre with the State Government subsidising 49% of the overall cost. Those with concession cards and pensions are excluded from the charge along with those who hold "ambulance only" private health insurance.

State Revenue Office in Victoria could not be reached for comment however in October 2016, Ambulance Victoria was allegedly pursuing $40 million in unpaid fees for patients transported by road and air ambulance with an emergency ambulance trip costing $1,174 in metropolitan areas and $1,732 in rural Victoria. Air ambulance cost up to $4,898 with this figure increasing to $10,475 for a helicopter.

In direct comparison those in Western Australia are charged $932 and South Australians $934 for emergency callout fees. Those in the ACT pay $918 for transport and treatment and in the Northern Territory the cost is based on a callout and kilometre fee with the average trip costing between $745 to $1,000. Those in the Northern Territory can elect to pay $85 per annum to receive unlimited free emergency ambulance transport.

Bessie Hassan, head of PR for, said, "Around one in four Australians believe ambulance services are covered by Medicare, so it could come as a surprise to many when they receive a bill in the mail a few weeks later. Ambulance cover can be available under hospital, extras or as a stand-alone health insurance policy and may include protection for emergency only or all ambulance use so it’s worth double-checking the fine print. There are a few options available for those who are unable to pay their ambulance fees upfront, so it’s worth doing your research if a bill comes in. Patients should bear in mind that in non-emergencies it could be cheaper and faster to simply drive or catch a taxi to the hospital.

Source: - February 2018

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