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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.

Is It Time To Review Your PPSR Registrations?

Tuesday, October 30, 2018 - Posted by Michael McCulloch

Do you know when your interest on the Personal Property Securities Register (PPSR) is due to expire?

It can be one of the more challenging things that we come across in the debt collection industry. A customer has relocated several times over a number of years however the debt is believed to be secured by an asset which, if repossessed, may finalise the debt or may entice the debtor to enter into a repayment arrangement which is maintained. Upon conducting a search of the PPSR it's then found that the security interest has lapsed. You now have essentially an unsecured debt with very little or no bargaining power.

While many organations used to employ a specialists securities agents this role has gradually been phased out and is now considered a day-to-day role of administration staff who may or may not keep an accurate register and may not know or realise the implications of the interest lapsing especially where a debt has been written-off. If this sounds familiar did you know that if you have a PPSR login that you can generate a report called Registrations Due to Expire?

The report includes information such as:


  • the SPG (Secured Party Group Number);
  • registration number;
  • end date and time of the security interest;
  • collateral type;
  • collateral class;
  • serial number and serial number type; and
  • details of the Grantor

The Registrations Due to Expire Report may be an invaluable report to you to keep track of your interests on the PPSR with reports being available to download in CSV or XML format.

ASIC Recommends Buy Now Pay Later Reform

Thursday, August 30, 2018 - Posted by Michael McCulloch

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:

  • providers may carry out limited inquiries of the consumers' financial situation prior to providing credit (noting the responsibile lending obligations do not apply);
  • some providers are funding high cost purchases (up to $30,000) over long repayment period;
  • consumers may lack understanding of what fees and charges are payable and when; and
  • vulnerable consumers may be using these products.

ASIC went on to say in the report that as those in the buy now, pay later sector do not charge fees or interest so therefore do not meet the definition of "credit" under the Code:

  • do not meet the definition of credit within the National Credit Code. Some providers extend funds without charging fees or interest and as such do not meet the definition of 'credit' under the Code;
  • meet the definition of credit but are exempt under s6(5) of the National Credit Code. Some providers rely on the continuing credit contract exemption under s6(5) of the Code as the only fee they charge is an establishment and/or account fee that does not vary according to the amount of credit provided and is set at a maximum of $200 in the first year and $125 every year thereafter; or
  • meet the definition of credit but are exempt under s6(1) of the National Credit Code: Some providers rely on the short term credit exemption under s6(1) of the Code which requires that the term not exceed 62 days and fees and charges not exceed 5% of the amount of credit.

A review however of the AfterPay website shows that late fees may be payable where an instalment was not paid by the due date:



With AfterPay reporting that late fee income increased 365% ($28.4 million) in their Annual Report, Consumer Action Centre's Senior Policy Officer, Katherine Temple, said in a statement, "Our financial counsellors report that we are receiving increasing numbers of calls from people with buy-now-pay-later debts, including Afterpay. Most people calling us for help who have Afterpay debts are juggling numerous other debts, such as credit cards, payday loans and utility bills."

We will continue to monitor for updates regarding the outcome of the report by ASIC and will post these as and when they become available.


ASIC Approves ABA Code of Practice

Thursday, August 30, 2018 - Posted by Michael McCulloch

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:

  • provisions for inclusive and accessible banking;
  • protections relating to the sale of Consumer Credit Insurance (CCI) included a deferred sales period of 4 days for CCI for credit cards and personal loans sold in branches and over the phone;
  • protections for Guarantors giving them generally 3 days to consider information about any guarantee they provide and requiring banks to only enforce a guarantee once action has been taken against the borrower;
  • rules regarding credit card customers to receive reminders about balance transfer promotional periods ending as well as more consistent treatment about how repayments are applied; and
  • enhanced processes for assisting customers in financial difficulty and processes for resolving complaints.

All ABA member banks will be required to subscribe to the Code as a condition of their ABA membership and the relevant protections in the Code will form of the banks' contractual relationship with their banking customers.

The Code will commence operation from July 2019.

Source: Money | Management - July 2018


Defendant Defeats Plaintiff in Preferential Payment Claim

Thursday, June 28, 2018 - Posted by Michael McCulloch

In the matter of Heavy Plant Leasing Pty Ltd (In Liquidation) (ACN 151 786 677) [2018] NSWSC 707 (8 February 2018), a Creditor had been applying pressure to obtain payment which was not forthcoming despite several months of requests for payment.

Once the company had been placed in liquidation the liquidator filed proceedings in the Supreme Court, as the Plaintiff (HPL) , against Ms Christine Mancer who trades as Bildavoid Concrete Voidforming Systems (Bildavoid), as the Defendant, claiming to recover $152,609.79 made by HPL to Bildavoid in February 2013. The application was made under the s588FF of the Corporations Act to recover those funds as an unfair preference, insolvent transaction and voidable transaction. The most common way to defend a liquidators claim again unfair preference is to rely on s588FG(2) of the Corporations Act, commonly referred to as "the good faith defence". The basis of the defence is that the Creditor argues that they received monies in good faith and they did not know, or ought not to have known, that the company was insolvent.


In relation to Bildavoid's pressure in which to obtain payment, the Court said, "These are steps that are taken just as much by an unpaid creditor of a solvent debtor as they are by an unpaid creditor of an insolvent debtor. The fact that a creditor applies pressure of that order to secure payment does not, to my mind, illustrate that the creditor fears or apprehends that the debtor is insolvent. The degree of pressure exerted by a creditor does not speak of a suspicion of insolvency, because a creditor is as likely to exert pressure on a recalcitrant solvent debtor as on an insolvent one."

It is important in these matters that if you expect that a company may be insolvent and owes you money that you seek timely advice from a qualified legal practitioner.

Please note that this article is not intended to be legal advice. You should seek your own independent advice from a qualified legal practitioner.

Attorney General Reviews Consumer Credit Reporting and Hardship

Thursday, June 28, 2018 - Posted by Michael McCulloch

The Attorney Generals Department has recently released a discussion paper regarding the relationship between consumer credit reporting and hardship.

The purpose of the paper is to examine whether hardship is currently treated adequately under the credit reporting provisions in Part IIIA of the Privacy Act, whether there are opportunities for reform and if so what reforms are appropriate.

The Attorney Generals Department did stress that the paper is not a general review of repayment history information in the consumer credit reporting system.

Source: Attorney General's Department - April 2018


FOS Admits Error In Final Determination

Thursday, June 28, 2018 - Posted by Michael McCulloch

The Financial Services Royal Commission has recently heard evidence from a widow that the Financial Ombudsman Service (FOS) made a Determination that she should pay her deceased husband's business loans worth $226,000 over a period of 12 to 18 months.

The evidence was highlighted after the widow, Jennifer Low, was pursued by Suncorp for the repayment of business loans that were provided to her and her late husband after a workplace accident claimed Mr Low's life in 2016. It is understood that Ms Low approached the Consumer Action Law Centre for assistance when Ms Low proposed to pay off the outstanding debt over the loans original 17 year term with monthly repayments of $1,111 which was higher than the contractual repayment however FOS declined her proposal.

FOS found that it would be reasonable for Ms Low to repay the loan, interest free, within 12 to 18 months or a maximum of 5 years. During the hearing, Phillip Field, Lead Ombudsman for Banking and Finance was forced to explain his decision where he claimed that he did not want Ms Low to be still paying the debt in her 80's. Mr Field told the royal commission, "What I had in mind was that situation where you had somebody who was in their 60s paying it until they’re 80. And certainly, from my perspective, if a bank were to lend to somebody in that scenario, I would regard that as not reasonable." He went on to say in the witness box, "In hindsight, I don’t think that was the correct thing to do. I think I should have accepted that the [Consumer Action Law Centre] position was correct and then got on the phone to the bank then and there to try and resolve the matter. I should have said that… once the arrears were cleared on — and at the time of that call it was, but provided the arrears — any arrears on the interest-free loan were also cleared, then if she could make those payments, she was entitled to do so and it would be interest-free until it was paid off."

While the Low Family has not yet accepted Suncorp's offer to extend the repayment period to 5 years instead of 12-18 months, Mr Field said that he expects the bank to change their position and allow Ms Low to make monthly principal-only repayments for the duration of the loan as per her original proposal.

Source: mortgagebusiness - May 2018


ABA Announces New Banking Code of Practice

Friday, April 27, 2018 - Posted by Michael McCulloch

The Australian Banking Association ("ABA") has recently announced the retail banks wishing to become members will now be required to sign up for the new Banking Code of Practice ("The Code").

The Code, which is currently awaiting approval by ASIC will be binding, enforceable by law and will be monitored by an independent body. The Code, which was originally introduced in 1993, requires retail banks to provide plain English contracts, stop unsolicited offers to raise credit limits, give customers the ability to end credit cards online and inform customers about service fees before they are incurred.

Regulating the Code will be the responsibility of the Banking Code of Compliance Committee ("BCCC") which will have the power to investigate breaches and apply sanctions. The move comes as the financial services industry tries to regain customer trust with the Financial Services Institute of Australasia ("FINSIA") calling for an industry-wide code to restore professionalism among its members as a way of winning back customer trust.

The ABA is looking to implement The Code within 12 months of approval being received from ASIC.

Source: Financial Standard - March 2018


Radio Rentals Fined $2 Million

Tuesday, January 30, 2018 - Posted by Michael McCulloch

A total of 278,683 Radio Rental leases that led to poor outcomes for consumers has resulted in ASIC pressuring parent company, Thorn Australia, to issue $19.9 million in refunds.

The action comes after ASIC filed proceedings in the Federal Court where ASIC proposed a $2 million penalty in addition to the $11.8 million the company has already refunded to affected consumers for not upholding responsible lending practices. A further $6.1 million will also need to be paid to cover refunds and defaults for 60,000 leases and potentially a further $200,000 more in costs to ASIC.

This is seperate to thet $50 million class action that was filed by law firm Maurice Blackburn in March 2017.

2 of the examples provided to the Federal Court of irresponsible lending include:

  • A 65 year old pensioner, Norma Wannell, purchasing 2 Dyson vacuums, with a combined retail price of $991, entering into an Agreement with Radio Rentals that would have cost her $3,900 over the term of the Lease; and

  • A mother of 5 in Wagga Wagga, NSW, purchasing a used mattress and bed for $430 but entering into an Agreement with Radio Rentals to pay back almost $3,300.

Acting Chairman of ASIC, Peter Kell, said in a statement, "If customers are paying more than what is required, lease providers need to promptly fix this or face regulatory action. The changes we have made to the consumer leasing division put it on a sound footing to meet the needs of its customers and satisfy its responsible lending obligations".

The Consumer Action Law Centre ("CALC") encourages consumers to seek additional compensation from Radio Rentals and reminded consumers that they may contact the Credit and Investments Ombudsman ("CIO"), of which Thorn Australia, is a member of, to make a complaint.

A spokesperson for Maurice Blackburn said that the recent Federal Court action has no impact on its upcoming class action.


AfterPay and zipPay Post-Christmas Warning

Tuesday, January 30, 2018 - Posted by Michael McCulloch

2 of the larger players in the 100% interest-free lines of credit, AfterPay and zipPay, have attracted the attention of Westpac with the bank warning their mortgage brokers that these payment schemes must be assessed as a liability when assessing a person's financial affairs.

AfterPay has more than 1.3 million customers in Australia and it's anticipated that annual sales will exceed $1.7 billion however a spokesperson for RateCity, Sally Tindall, said in a statement, “It’s easy credit for people who might not otherwise get a credit card and if you rack up a significant amount on these payments schemes it will have long-term repercussions if you can’t pay down the debt. The good thing is there are limits on AfterPay up to $1500 per transaction so there are sensible perimeters to help people pay it back, but if they put these payments on a credit card they can be hit by nasty interest rates.”

AfterPay Chief Executive, Nick Molner, said that a majority of their customers meet their repayments and pay-off their purchases without incurring any fees. He went on to say that 85% of AfterPay payments are made using a debit card and not a credit card.

Both AfterPay and zipPay offer customers the opportunity to order online or make a purchase in -store without providing any information regarding their financial position with charges only being incurred if the amount owing is not paid by the due date.

Source: The Daily Telegraph - December 2017


Credit and Charge Card Statistics April 2017

Thursday, June 29, 2017 - Posted by Michael McCulloch

Every month the Reserve Bank of Australia ("RBA") releases a range of statistics for transactions incurred 2 months prior across a range of products.

These payment statistics offer an insight across several products including Credit and Charge Cards, ATM Cash Withdrawals, Debit Card Statistics, Cheque and Direct Entry Payments, etc

This month we've focused our attention on Credit and Charge Card statistics for the month of April 2017. The key points coming out of these statistics were as follows:

16,752,000
The number of credit and charge card accounts held by Australians

200,208,000
The number of credit and charge card purchase transactions

$22,857,000,000
The value of credit and charge card purchase transactions

$25,112,000,000
The total value of credit and charge card repayments

$32,196,000,000
The total value of credit and charge card balances accruing interest

$52,030,000,000
The value of credit and charge card total balances

$151,469,000,000
The value of credit and charge card credit limits

The graph below shows a direct comparison to the same period last year:

While there were increases across all credit and charge card statistics overall all increases were less than 1% 

The RBA indicated that approximately 2 million Australians fail to pay off their credit card balance in full each month.  With the average credit card limit of $4,500 it would take 31 years in which to finalise the balance making minimum repayments only.

Source: Reserve Bank of Australia - Payments Data



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