At LCollect we believe that knowledge is power. Every month our debt collection blog gives you practical tips, stories and news from around Australia and the world.
In our January 2018 edition of debt collection news we posted an article AfterPay and zipPay Post-Christmas Warning which indicated that Westpac was warning their brokers that these payment schemes must be assessed as a liability when assessing a persons capacity to service a mortgage.
This month the Australian Securties & Investments Commission (ASIC) has come out and released a report "Design and Distribution Obligations and Product Intervention Power"which recommends broadening their powers to cover the buy now, pay later sector which is not currently regulated by the National Credit Code. In the report ASIC noted:
In our April 2018 edition of Debt Collection News we reported that the ABA announced a new Banking Code of Practice which was subject to approval by ASIC.
ASIC has now signed off on the new Banking Code of Practice following an independent review and extensive consultation with the ABA.
The new Code provides for increased protections for small business borrowers and expands the reach and impact of legal protections against unfair contract terms. Expanded protections for consumers included:
The Code will commence operation from July 2019.
Source: Money | Management - July 2018
The Australian Financial Security Authority (AFSA) has recently released their regional personal insolvency statistics for the June quarter 2018.
Debtor increases were seen across all regional areas, except Greater Hobart and the Australian Capital Territory, between the March quarter 2018 and June quarter 2018. Wanneroo in Western Australia recorded the most personal bankruptcies being filed with 117 followed by Wyndham in Victoria (93) and Wyong in New South Wales (89).
The regional statistics report on all debtors who became bankrupt or entered into a debt agreement or personal insolvency agreement during the quarter. The number of debtors is measured as follows:
A debt collection agency who act for Telstra has lost their case in the Federal Court following proceedings being commenced by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC).
The proceedings, which commenced in June 2016, highlighted the pressure some agencies apply to collect payment including engaging in misleading, deceptive and unconscionable conduct in it's dealings with 2 particular customers.
The first customer, CT*, who was living in a care facility on a disability support pension, after having suffered 3 strokes, received in excess of 60 demands for payment for a debt of $5,770. The Court found that the agency knew of CT's condition, which left him with the inability to care for himself or readily speak, however called the care facility approximately 40 times and sent approximately 20 demand letters seeking payment. Several times CT was threatended with legal action despite the agency not having any plans to follow through with the threat.
In the other matter a single Victorian mother of three, who worked part time and received a Centrelink payment, was demanded to pay $3,150. It was alleged that the woman was told that legal proceedings would be commenced against her and that a payment default would be recorded. The woman in question promised a payment of 50% of the debt in an attempt to avoid legal proceedings, despite this payment leaving her unable to pay rent and meet her other day-to-day expenses.
The Judgment, which you can read online, also criticises the capitalised use of words in demand letters and the use of “the words 'could' and 'may' would reasonably be read in the light of the prominent heading to the pro forma letter, the terms of which strongly suggest that ACM intended shortly to commence legal proceedings .....".
In a statement to the media the ACCC said that they will be seeking Orders preventing agencies engaging in misleading, deceptive and unconscionable conduct and will be seeking for large fines to be imposed.
Source: itnews - July 2018
* Name noted as per the original Judgment
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
The Labor party in Victoria has planned a crackdown on debt collection in Victoria if re-elected at the November State election.
news.com.au 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.
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 firstname.lastname@example.org by 30 July 2018.
Source: AFSA Newsroom - July 2018
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.
In a recent interview with nestegg.com.au, 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:
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."