Released every month our debt collection blog contains news, stories and tips to keep you informed.
Newly appointed Chief Ombudsman, David Locke, has recently announced in an article in the Financial Review that Financial Service Providers (FSPs) that fail to respond quickly to matters brought to the attention of the Australian Financial Complaints Authority (AFCA) may face bigger compensation bills.
Since its inception in November 2018 AFCA claim to have received 11,500 complaints of which 4,000 have been about FSPs. By direct comparison the Financial Ombudsman Service, at its peak, received 2,100 complaints per month.
Mr Locke indicated that responsible lending and misleading sales were among the issues most frequently complained about by consumers and said in a statement, "The volumes of matters coming to us are very high. A lot of people have been treated very poorly by financial institutions over a number of years. The royal commission has shone a bright and forensic light on some issues but most people still feel they haven't been heard or had their matters addressed."
While Mr Locke was unable to provide an actual dollar figure for compensation ordered to date he did indicate that the AFCA cost model is structured so FSPs pay more the longer a dispute goes on so there is an incentive to resolve disputes as quickly as possible.
Of the 11,500 complaints since AFCA came into power 32% of cases have been resolved.
You may recall in our August 2018 edition of Debt Collection News that we reported that the Federal Court found against a debt collection company acting for Telstra after proceedings were commenced by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities & Investments Commission (ASIC).
It has now been revealed by Yahoo! Finance that the Federal Court has ordered the debt collection agency involved to pay $750,000 in penalties for intimidation and harassment of the 2 customers who collectively owed $8,920.
The debt collection agency involved in the proceedings was ruled last year to have violated Australian Consumer Law after the ACCC commenced legal action in June 2016 where it was alleged that the agency had contacted a stroke victim on more than 40 occasions demanding payment including 20 demands made by letter despite the customer indicating to the agency that he had difficulty in speaking and could only utter single words like "stroke", "no" and "speech" in an attempt to indicate that he was disabled and unable to communicate.
ACCC Commissioner, Sarah Court, said in a statement, ".... continued harassment and intimidation of a care facility resident who had difficulty speaking after suffering multiple strokes is one of the worst cases of unconscionable conduct we have seen in the debt collection sector .... conduct towards another consumer who was in difficult financial circumstances, which included giving false information and making empty threats of court action, was also particularly egregious."
Commissioner Court went on to say, "Unconscionable conduct such as harassment, intimidation and coercion of consumers is unacceptable to not only the ACCC and the court, but the wider community."
A spokeperson for Telstra distanced the company from the proceedings stating, “collection activity is being conducted on behalf of the new owner, not on Telstra’s behalf” and that the telco sells debt to a third party only as a last resort."
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The NSW State Government has recently announced a new free online legal service to assist people who may be experiencing mortgage stress.
The LawAccess NSW website now provides 2 interactive guided pathways to match people with the information they may need to assist them in resolving issues surrounding mortgage stress or unpaid council rates with another 4 pathways on other topics to come online later this year.
Attorney General Mark Speakman said, "This service is arriving at a crucial time for families facing mortgage stress. The online pathways are convenient and easy to use, with users only needing to answer a few simple questions to get reliable legal information and practical solutions tailored to address their situation. For example, the mortgage stress pathways provide information on budgeting, seeking a ‘hardship variation’ to a loan and tips on avoiding ‘quick fix’ pitfalls that could ultimately cause greater financial pain."
The pathways are a new online resource which makes up part of the NSW Government's $24 million Civil Justice Action Plan which harnesses technology and innovation to make it faster and easier for people to navigate the Court system and resolve their legal issues. Other key aspects of the plan include:
- creating a $1 million Access to Justice Innovation Fund to encourage legal professionals, digital experts and community groups to develop ideas to improve the way legal problems are solved;
- allocating almost $20 million in new funds for community legal centres over the next 4 years;
- expanding the online Court services to allow more people to finalise their case from the convenience of their own PC;
- increasing the jurisdiction of the Local Court's Small Claims Division to hear disputes up to $20,000 (the current limit being $10,000); and
- introducing online guidelines to encourage local and State Government to resolve unpaid debts early including negotiating time to pay arrangements.
Learn more via the Guided Pathways site at LawAccess NSW.
Recent changes in NSW have extended the amount of to 7 working days for documents served by regular post (an increase from 4 working days). A working day is deemed to be a day that is not a weekend or a public holiday.
This change effects documents particular to NSW. It does not change Consumer Credit Notices (such as s88 default notices).
For example, some of the notices impacted include;
This article is not intended to be and does not constitute legal advice.
A school district has allegedly hired a debt collection agency to recover lunch debts owed by parents.
In an article in Turnto10, it is being claimed that the Cranston Public Schools District located in Rhode Island, New England, are owed US$45,859 for unpaid lunches. It is being reported that parents have been notified that from January 2019 that debts owed on school lunches would be referred to a debt collection agency where the amount owed exceeded US$20.
School Chief Operating Officer, Raymond Votto, said in a statement to Turnto10, "In an effort to reduce our unpaid balance, the District has retained the services of a collection agency. The company is Transworld Systems and they will begin their collection efforts effective January 2, 2019". Mr Votto went on to claim that in the last 2 financial years the school district had lost US$9,508 from lunch debt. The move has been criticised by some and the impact this may have on struggling families where 43% of students are eligble for free or reduced lunches.
The Cranston Public Schools District isn't the 1st of its kind to refer these types of debts to debt collectors. In 2011 in Davidson County, North Carolina, policy dictated that lunch debts above US$37.50 be sent to collections while in 2012 an Ohio District sent US$900,000 in lunch debt to be recovered.
Lunches in the Cranston Public Schools District average US$2.50 per day for elementary school students and US$3.50 per day for middle and high school students.