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Debt Collection News

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

Consultation of AFCAs Proposed Funding Model

Monday, July 30, 2018 - Posted by Michael McCulloch

The Australian Financial Complaints Authority (AFCA) has recently released a consultation paper which sets out how the new external dispute resolution scheme proposes to recover the cost of it operations.

A three-phase funding model has been developed by AFCA. Extracted from the AFCA Funding Model Overview:

Phase I - Transition Funding
  • Meeting the costs of AFCA's establishment so that it is adequately prepared to receive and handle complaints from commencement on 01/11/2018.
  • Transition funding covers both the governance-related costs and the costs of establishing and operationalising AFCA to be ready to receive up to 1,000 complaints in the first week of commencement. In the May 2018 the Federal Governement allocated $1.7 million as contribution to AFCA's 2018-19 establishment costs.

Phase II - Interim Funding Model

  • To apply for the first three years of AFCA operations (FY2018/2019 – FY2020/2021). During this period a hybrid funding model is proposed to be applied - based on aspects of the existing scheme funding arrangements for Firms that are FOS and CIO scheme members, and the APRA levy model for superannuation trustees who become AFCA members.
  • The first two months of funding in 2018-19 cover the operations of the FOS scheme (operated by AFCA), funded by FOS members who transitioned their membership to AFCA on 1 May 2018, with the next two months funded by both FOS and CIO members. The subsequent eight months will fund the newly formed AFCA from its commencement on 1 November 2018, and will be managed in accordance with the interim funding model, outlined in this funding model overview.
  • The interim funding arrangements will apply while AFCA establishes an evidence base of complaint volumes and complexity in an expanded jurisdiction, and settles complaint handling approaches and required skills/resources to manage the full range of complaints.

Phase III - A Long-Term Funding Model
  • A long-term funding model – to be adopted following a full funding review based on complaint forecasts, operational efficiency savings across the consolidated scheme, and resource requirements for the long-term future of AFCA.
  • The review will seek options for a revised funding model developed from consultation with stakeholders and settlement by the AFCA board following discussion with the Minister for Revenue and Financial Services and ASIC. The long-term funding model is proposed to be implemented from July 2021.

Feedback regarding the consultation paper can be directed to AFCA via email.

Victoria Plans Crackdown on Debt Collection Industry

Monday, July 30, 2018 - Posted by Michael McCulloch

The Labor party in Victoria has planned a crackdown on debt collection in Victoria if re-elected at the November State election. and radio 3AW 693 are reporting that organised crime groups will be the focus of a planned State Government crackdown on the debt collection industry with Police Minister, Lisa Neville, announcing earlier this month an overhaul of the regulations. In a statement to the media she said, "We'll clean up this industry, like we did with scrap metal - to tackle organised crime and crack down on rogue operators."

The Labor Government, if re-elected, would like to establish a dedicated commission and harsher penalties for those involved in unlicensed debt debt collection in Victoria and would work more closely with the police, Consumer Affairs Victoria and industry leaders to clean-up the industry.

Chief Executive of the Australian Collectors and Debt Buyers, Alan Harriers, said in response, "If they are that [sic] then it's up to Fair Trading to stop them as being illegal persons doing debt collection. I am unaware of any prosecutions against people in this regard. If they were actual proper debt buyers, they would hold an Australian credit licence that is issued by ASIC. It's a very highly regulated industry."

In Victoria there is not a legal requirement in which to hold a debt collection licence.

Release of New Bankruptcy Notice Warning

Monday, July 30, 2018 - Posted by Michael McCulloch

The Australian Financial Security Authority (AFSA) has recently published a fact sheet that they recommend be attached to all future Bankruptcy Notices.

The fact sheet, Warning - You May Be Declared Bankrupt, outlines to the Judgment Debtor the options available to them rather than ignoring the Bankruptcy Notice or unintentionally committing an act of bankruptcy.

AFSA claim that by providing this information it will potentially shorten the administrative burden on Creditors, Judgment Debtors and Trustees with the possibility of potential bankrupts making arrangements to repay their Creditors or contest a Bankruptcy Notice sooner rather than later.

Feedback can be provided to AFSA about the document via by 30 July 2018.

Source: AFSA Newsroom - July 2018

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Changes to Garnishee Orders in NSW

Monday, July 30, 2018 - Posted by Michael McCulloch

There has been an amendment to the requirements for issuing Garnishee Orders for Ddebts. If you are using this enforcement action, you must now state the grounds relied on in support of identifying a debt owed by the Garnishee to the Judgment Debtor in the form of an Affidavit.

UCPR 39.35 now states:

(1) Unless the court orders otherwise, an applicant for a garnishee order must file an affidavit in support of the application, being an affidavit sworn not more than 14 days before the date of filing.
(2) The affidavit in support:
(a) must identify the garnishee, and any debts that are, or are reasonably likely to be, owed by the garnishee to the judgment debtor, and
(a1) must state the grounds relied on in support of identifying a debt for the purposes of paragraph (a), and
(b) must state the amount payable under the judgment, together with any costs and interest payable in relation to the judgment, as at the date of swearing of the affidavit.

For advice as to what this legislative change may mean to you and future applications for Garnishee Orders we recommend that you contact Collection Law Partners or seek your own independent advice from a qualified legal practitioner.

Trustee Discloses Likely Bankrupt Professions

Monday, July 30, 2018 - Posted by Michael McCulloch

In a recent interview with, principal registered trustee, Andrew Aravanis of Aravanis Insolvency, has disclosed the professions most likely to file for bankruptcy based on their own 2017 client base.

Making the top 5 professions were:

  1. Managers (sales, marketing, PR, business administration, ICT)
  2. Machine and stationary plant operators
  3. Road and rail drivers
  4. Business, human resource and marketing professionals
  5. Health professionals (nurses and midwives)

In the interview Mr Aravanis said that those filing for bankruptcy did not appear to share any common traits apart from being in severe financial difficulty caused by redundancy, family breakdowns or bereavement. He went on to say, "Although it is happening slowly, more and more Australians are realising that bankruptcy is actually a valid choice when faced with overwhelming debt. With more information on how to navigate bankruptcy and with the stigma fading away, thousands of Australians are choosing personal insolvency options like bankruptcy to help them to move on from an unmanageable financial situation and a highly stressful emotional position."

Mr Aravanis went on to say that those experiencing financial difficulty can access professional services for free. Some of these services include the National Debt Helpline or finding a financial counsellor through Financial Counselling Australia.

ASIC Releases Regulatory Guide 267 Oversight of AFCA

Monday, July 30, 2018 - Posted by Michael McCulloch

The Australian Securities and Investments Commission (ASIC) has now released Regulatory Guide 267 Oversight of the Australian Financial Complaints Authority ahead of the 1 November 2018 transition.

The RG sets out how ASIC will perform their oversight role in relation to the Australian Financial Complaints Authority (AFCA) and includes guidance regarding members AFCA membership obligations.

ASIC has noted that it will retain its existing guidance under RG 139 until all complaints made under the existing schemes have been resolved and also stated, "Licensees and credit representatives must continue to maintain their EDR [external dispute resolution] membership through the transitional period, including paying membership and other scheme fees in full as required."

Download RG 267 Oversight of the Australian Financial Complaints Authority

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