Released every month our debt collection blog contains news, stories and tips to keep you informed.
As you may be aware once a debt has been referred to External Dispute Resolution ("EDR") all collection action should cease pending the complaint or dispute being resolved. What happens though when you have a Judgment and a dispute or complaint is lodged?
Both of the current EDRs in the Financial Ombudsman Service ("FOS") and the Credit and Investments Ombudsman ("COSL") have Terms of Service which clarify their position when it comes to a Judgment with both indicating that where Judgment has been entered they have no jurisdiction but how does this work in a practical sense?
In our quest for answers we reviewed some of the outcomes where Judgment was entered and a complaint or dispute was lodged with an EDR. In our search we came across a Review by COSL in August 2016. The original complaint related to:
49. For the reasons set out in the Review and this Determination, I find that the consumer's claims have either not been made out or are outside our jurisdiction.
In summary it is now our opinion having read the Review, Determination and Decision that while enforcement of a Judgment Debt cannot continue while a complaint or dispute is before EDR that if a Defence or a Motion is filed by a consumer in the Court that the FSP has the right to respond to an action raised by a consumer.
Disclaimer: This article is general information only and does not constitute legal advice and is not intended to be relied on in any way.
Back in our February 2017 edition of Debt Collection News we reported councils considering home repossessions to recover unpaid rates in the Bowen Basin Local Government area.
This month it is being reported that Bundaberg Regional Council has listed several properties for auction for rate arrears. A council spokeperson said that in November 2017 council authorised a total of 43 properties to be sold at auction representing outstanding rates of just under $475,000. Of the 43 properties only 7 remain however according to Council many ratepayers will settle their debt prior to the hammer falling.
In a statement a council spokesperson said, "Ratepayers who find themselves facing the auctioning of their property have ignored numerous phone calls, letters and approaches from council's debt management team and authorised recovery agency. It is quite normal for the outstanding rates on a majority of properties to be settled prior to auction".
The auction is scheduled for Thursday, 12 April 2018.
Source: NewsMail - March 2018
We have again received notification from the Credit and Investments Ombudsman ("COSL") that this practice seems to be ongoing. From their March 2018 edition of CIO News we came across this reminder -
We have recently received a number of complaints against consumer lease providers, where the FSPs have reported their customers to the police. They were reported on the basis that the goods associated with the lease, were stolen as these customers had defaulted on payments.
We would like to remind our FSP members that they have enforcement rights under the National Credit Code. We would consider these as more appropriate when enforcing their rights due to non-payment. We note that this is despite a number of states have broad definitions of stealing and fraud under their criminal codes.
A decision to report goods as stolen, rather than pursue standard collections or enforcement action, does not demonstrate good industry practice.
In our November 2016 edition of Debt Collection News we reported about this very issue in Financial Service Providers Argue Criminal Proceedings Outside Ombudsman Jurisdiction.
As we indicated in our previous article it still remains unclear as to the final outcome of the investigation by COSL however as they noted in their reminder enforcement of the debt should be undertaken via the NCC and not by the police.
Source: CIO News - March 2018
Recently the Credit and Investments Ombudsman ("COSL") have recently released their Position Statement regarding unjust transactions.
The Position Statement covers areas such as:
A Perth resident, Michael Reed, received received a letter of demand from a debt collection agency for a gym membership from his local Anytime Fitness.
While this isn't entirely unusual with the make-up of these Agreements when memberships are cancelled, Mr Reed was demanded to pay $10,296,696.40. This is the equivalent to a membership of at least 20,000 years. In a statement to the media Mr Reed said, "I had a heart attack when I opened it. The guys at work thought it was great. They suggested I set up a GoFundMe page. I guess I know the price for perfect abs is out of my reach now."
Once the issue was identified Mr Reed said that Anytime Fitness were very helpful and the collection agency confirmed that there was an administrative error, apologised and paid his gym membership for a year as compensation.
Source: Perth Now - March 2018
Recently we have again seen an influx of requests by credit repair companies requesting that payment defaults or Judgments be removed from consumer credit files.
Typically these requests are received after a debt has been paid in full or settled with consumers being told by credit repair companies that they can remove a default. Such a request usually involves the credit repair company forwarding a default removal request and a signed privacy consent form with reference to Section 2.23 of the Credit Reporting Code of Conduct. Of interest in receiving these requests is a demand that the request be complied with within 10 business days. This is in fact incorrect in that the credit repair companies are making reference to the repealed Part IIIA of the CRCC:
That aside the formal stance from Equifax regarding the removal of defaults can be found on their page Can I Have Information Removed from My Credit File?
Generally speaking a default will only be removed if:
Disclaimer: The information contained in this article does not constitute legal advice and should not be used as such. You should obtain your own independent legal advice before acting or relying on its content.
The Federal Court has recently published their reasons and finding for ordering Australian and New Zealand Banking Group Ltd ("ANZ") to pay $5 million for breaches of responsible lending provisions.
ANZ has agreed to pay the fine as part of settlement of the case which also saw them admitting to 24 breaches of responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth) for car loans approved by Esanda from 3 finance brokers. We covered the successful prosecution of 1 broker in our May 2017 edition. ASIC alleged that between July 2013 and May 2015 that ANZ failed to meet their obligations when it relied on payslips only included in 12 car loan applications to verify the consumer's income. ANZ claimed to have detected and reported the suspected fraudulent conduct by the brokers and that it disaccredited the individuals involved and no longer accepts applications from them.
In relation to the civil penalty proceedings the Federal Court found ANZ:
In February 2018 the Australian Government released for consultation the draft regulations on the transfer of the early release of superannuation on compassionate grounds to the Australian Taxation Office ("ATO").
These regulations will provide the necessary administrative grounds to transfer the authority for the early release of superannuation on compassionate grounds from the Department of Human Services to the ATO with the draft regulations set to improve the integrity of the current process and to expidite the release of those funds to successful applicants. The Minister for Revenue and Financial Services, Kelly O'Dwyer, said in a statement, “The regulations require the ATO to directly notify a member’s superannuation trustee when it has authorised the early release of funds, removing the need for that trustee to independently confirm the amount authorised for release."
“At what are often times of great stress and concern for the individuals involved, these changes will cut the administrative burden for superannuation trustees and will help successful applicants receive their authorised funds sooner.”
The authority for the early release of superannuation is not the only potential upcoming change with new rules also set to be introduced regarding what early access of superannuation can be used for.
Under the current rules superannuation may be released on compassionate grounds for: