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Debt Collection News


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

ASIC Recommends Buy Now Pay Later Reform {Updated April 2019}

Monday, April 29, 2019 - Posted by Michael McCulloch

In our August 2018 and December 2018 editions of debt collection news we reported on  an ASIC investigation into the "buy now pay later" segment which has become popular among consumers as a means to finance small to medium purchasers and pay these purchases off interest free over a period of time.

Legislation has been passed which gives the Australian Securities & Investments Commission (ASIC) new powers to regulate this emerging sector. The laws provides ASIC with the power to protect at-risk consumers with James Shipton, ASIC Chair, stating, "

These new powers will enable ASIC to take broader, more proactive action to improve standards and achieve fairer consumer outcomes in the financial services sector. This will be a significant boost for ASIC in achieving its vision of a fair, strong and efficient financial system for all Australians."

The reforms will be phased in over a period of 2 years and will require companies to identify in advance if a product is appropriate for a consumer. Read the ASIC media release at 19-079MR ASIC Welcomes Approval of New Laws to Protect Financial Service Consumers


Changes to Consumer Defaults

Friday, March 29, 2019 - Posted by Michael McCulloch

It is being reported by Equifax that the Office of the Australian Information Commissioner (OAIC) has provided a view that all defaults will now be recorded as a paid status regardless of whether the debt is paid or settled.

Previously Creditors had the opportunity to record a debt as being settled where a reduced amount was accepted however the OAIC has advised Equifax that by 15/02/2019 all existing accounts listed with an "S" code (settled) must be converted to a "P" code (paid). Default informaiton also being submitted by IQ Connect, XML or Data Enrichment Systems by Creditors will also need need to follow the new definition of a paid default.


ASIC Recommends Buy Now Pay Later Reform {Update}

Friday, December 28, 2018 - Posted by Michael McCulloch

In our August 2018 edition of Debt Collection News we reported that ASIC were recommending reform to the "buy now, pay later" providers such as AfterPay and zipPay.

Following a report from the Australian Securities and Investments Commission (ASIC) it is being reported by Financial Review that the National Credit Code would not extend to the buy now, pay later sector however ASIC are indicating that there will still be close monitoring of those involved in providing the service to consumers.

The report from ASIC identified 3 key areas of focus:

- ASIC states that it will take regulatory action to address misconduct and monitor industry and risks to consumers;
- ASIC is "considering their legal position" of scenarios where a merchant inflates the cost of the underlying goods if a consumer uses a buy now pay later arrangement.
- ASIC is also 'monitoring' the issue of consumers becoming increasingly indebted due to the ability to access an alternate providers where they have missed payments. According to ASIC, each provider reviewed takes some steps to refuse some credit applications eg if a consumer misses a scheduled repayment, five of the six providers suspend that consumer’s ability to make additional purchases until they have remedied the missed payment.  However, only one out of six providers in the review examined the income and existing debts held by consumers before providing their services.  ASIC also received reports of instances where consumers were allowed to the service despite having limited or no income and substantial existing debt; and
- ASIC states that it expects providers to ensure that:
(a) consumers adequately understand the terms of their arrangement;
(b) a complaints process is visible and accessible for consumers;
(c) consumers understand that they can request financial hardship assistance from their provider; and
(d) merchants act consistently with guidelines supplied by the provider which limit how these arrangements may be promoted and provided to consumers.  ASIC writes that 'while we identified instances where providers could have done more, each provider demonstrated a readiness to work with ASIC by improving their practices in response to our recommendations' and that some have already implemented 'several improvements'.

A copy of the report released by ASIC can be read online at Report 600: Review of Buy Now Pay Later Arrangements November 2018.


Australian Government To Crack Down On Late Paying Large Corporations & Government Departments {Update}

Thursday, November 29, 2018 - Posted by Michael McCulloch

You may recall in our November 2016 edition of Debt Collection news that there were moves within the Government to crack down on late paying large corporations and Government departments. 

It appears that this issue has been raised again with the Small Business Ombudsman, Kate Carnell, telling Fairfax Media that she was again conducting a review of payment times and the impact that this has on cash-flow on small businesses in Australia.

This again follows the Ombudsmans review into payment times last year, which we covered in Australian SMEs Owed More Than $10,000, which identified Australian payment times as the worst in the world with invoices paid, on average, 26.4 days past due. In a statement to the media Ms Carnell said, "It is big businesses using small business as a cheap bank," Ms Carnell said. "It really does slow down the economy. Poor cash flow is the primary reason for insolvency in Australia.”

The recent move by the Ombudsman appears to have been prompted by Small Business Minister, Michaelia Cash, who requested in writing advice from the Ombudsman for advice as to the impact payment practices have on small business. Ms Cash said, "I am still getting reports of payment terms of 60, 90 or 120 days or alternatively loans for extended payment terms. I find that very troubling particularly when cash flow is king for small businesses. It continues to be an issue and we will tackle it."

Following last years inquiry the Business Council of Australia launched a voluntary code to ensure that small businesses were paid within 30 days of an invoice being issued. With, however only 47 of 139 members, subscribing to the Code there is now some consideration being given to passing legislation in which to compel payment to ensure small businesses continue to survive.

A short survey is available online for small businesses to complete about the payment times they encounter. 


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



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