ACCC report on debt collection industry reveals improvements but warns against non-compliance

22 May 2015

A report released today by the Australian Competition and Consumer Commission and its Consumer Consultative Committee has found that there have been improvements in debt collection practices across Australia but that problem areas remain.

With over 500 businesses offering some form of debt collection service in Australia and collectors making up to 65 million contact attempts each year,  the report reveals the scale and breadth of the industry which affects many Australian consumers.

“The debt collection industry has made significant improvements in recent years. Many in the industry clearly take their compliance obligations seriously and are committed to improving their reputation. However, this report shows there is room for further improvement,” ACCC Deputy Chair Delia Rickard said launching the report at the Institute of Mercantile Agents Annual Conference.

“Debt collection can be a stressful experience for consumers, and can exacerbate existing financial pressures. Debt collectors that do not comply with the debt collection guideline may cause harm to disadvantaged or vulnerable consumers and become a target of ACCC action.”

The ACCC and the Australian Securities and Investments Commission (ASIC) both enforce Commonwealth consumer protection laws relating to debt collection and have recently updated their joint Debt collection guideline for collectors and creditors. This guideline assists creditors, collectors and debtors to understand their rights and obligations, and ensures that debt collection activity is undertaken in a way that is consistent with consumer protection laws.

 “The guideline makes the expectations of the regulators clear. All businesses collecting debts, including retailers collecting their own debts, are subject to the consumer protection provisions of the Australian Consumer Law. The ACCC will be engaging with the debt collection industry to make them aware of the findings of the report and the importance of complying with the guideline,” Ms Rickard said.

The report, Research into the Australian debt collection industry, provides the ACCC, other regulators, consumer advocates, and industry with a greater understanding of debt collection practices and identifies compliance challenges in the various sectors of the industry which may risk consumer harm.

Issues of particular concern identified in the report included:

  • Some in the sector not abiding by the Guidelines and the law who cause considerable detriment to vulnerable and disadvantaged consumers.
  • Problems that can be traced back to the retailer or service provider. Consumer advocates are particularly concerned about debt collection practices within the energy sector. Billing issues, management of hardship, disconnections and the referral of debt to multiple debt collectors were cited as concerns.
  • Widespread concerns about the practices of Credit Repair businesses. While not considered part of the debt collection industry these businesses can charge consumers large fees –consumer advocates state that these are sometimes larger than the debts involved – for support that is freely available to them from other agencies such as industry ombudsman schemes and financial counsellors.
  • Debt collection processes that impose addition costs that can add to the detriment for consumers already in financial distress.

The ACCC will be engaging with a range of industries referred to in the report to ensure they are aware of their obligations, both when collecting debts themselves, and when engaging collectors or selling debts.

Businesses engaging debt collectors may be held responsible for their agent’s collection activities even where the agent acts in a way that is contrary to their debt collection agreement.

See also: Research into the Australian debt collection industry.

See also: The ACCC and ASIC Debt collection guideline for collectors and creditors.

The ACCC and ASIC also publish a guide for consumers who are currently dealing with debt. Dealing with debt collectors: your rights & responsibilities.

Release number: 
MR 91/15
Media enquiries: 
Media team - 1300 138 917

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