Debt collection guideline: for collectors and creditors

Appendix B: Other statutory and common law obligations and remedies

In some situations, a complaint may relate to a range of debts, including debts for financial services and debts for a good or non-financial service. The ACCC and ASIC coordinate their regulation and litigation activities when debt collection conduct involves overlapping jurisdiction and may delegate authority to each other as required.

Apart from the Commonwealth consumer protection laws outlined in part 3 of this guide, there are a range of other statutory and common law obligations and remedies that potentially affect collectors’ and creditors’ operations.107 These include (but are not limited to) those listed below.

State and territory fair trading laws

The ACL is applied as a law of the Commonwealth and each state and territory.108 However, provisions of the Australian Consumer Law and Fair Trading Act 2012 (Vic) also prohibit certain conduct, including undue harassment and coercion.109 The Victorian provisions also permit debtors to seek up to $10 000 as compensation for humiliation and distress caused by debt collection conduct.110

State and territory licensing of collectors

Most state and territory jurisdictions have occupational licensing requirements applying to a range of persons involved in debt collection activities.111 These laws impose certain obligations on licensees, and set out grounds on which the relevant authority can refuse to grant or cancel a licence.

In Queensland, licensed commercial agents are subject to a mandatory industry code of conduct, the Commercial Agency Practice Code of Conduct.112 In other jurisdictions conduct requirements may be imposed under the legislation itself.113

National Consumer Credit Protection Act

Reforms to consumer credit law have resulted in a single national consumer credit regime governed by the NCCP which includes the NCC as Schedule 1. The NCC replaces previous state-based consumer credit codes and the Uniform Consumer Credit Code (UCCC). ASIC is responsible for administering the NCCP. The NCC applies to credit contracts entered into on or after 1 July 2010 where:

  • the lender is in the business of providing credit
  • a charge is made for providing the credit
  • the debtor is a natural person or strata corporation
  • the credit is provided for personal, domestic or household purposes, or to purchase, renovate or improve residential property for investment purposes, or to refinance credit previously provided for this purpose.

The NCCP applies a licensing regime to those providing regulated credit or credit assistance and therefore require an Australian Credit Licence. Purchasers of regulated credit are providers for the purposes of that regime, but debt collectors acting on behalf of a credit licensee may have the benefit of an exemption.114

National Energy Retail Law

The National Energy Retail Law (NERL) (and National Energy Retail Rules) commenced on 1 July 2012 in the Australian Capital Territory (ACT) and Tasmania (for electricity only). South Australia commenced the NERL on 1 February 2013 and New South Wales on 1 July 2013. These laws and rules provide a national customer protection framework for the retail sale of electricity and gas to residential and small business energy customers. In particular, it sets out requirements on energy retailers to assist customers who are facing financial hardship and looking for help to manage their bills. It includes obligations regarding when a customer can be disconnected and when debt collection proceedings can commence.

State and territory unauthorised documents laws

Unauthorised documents acts in each state and territory make it an offence to design collection letters of demand in a way that makes them look like court documents.115

State and territory limitation of actions laws

Each state and territory sets limitation periods on debt recovery actions.116 These generally bar a remedy to the creditor if a defence pleading expiration of the limitation period is filed. In the case of simple contracts (which include the majority of debts referred for collection) the limitation period is normally six years (however, in the Northern Territory a three-year period applies.) In some jurisdictions, a payment or acknowledgment of the debt will re-start the limitation period even after the original period has expired. Limitation acts also regulate the enforcement of court judgments.

Bankruptcy laws

Under the Bankruptcy Act regulated by the Australian Financial Security Authority, acceptance of a Part IX debt agreement or execution of a personal insolvency agreement prevents a creditor taking further action against a debtor in relation to their provable debts. A debtor is released from these debts after discharge from bankruptcy, or when all the obligations under the debt agreement are completed. A personal insolvency agreement may provide that the debtor is released from provable debts. Most unsecured debts will be provable.

Privacy laws

Part IIIA of the Privacy Act governs the handling of credit reports and other credit-worthiness information about individuals by credit reporting agencies and credit providers. Some of the requirements include what information can be stored on a credit report, how long such information can be included, and to whom and under what circumstances access is allowed.

The APPs also regulate certain private sector entities in their dealings with personal information. These provisions of the Privacy Act, where applicable, regulate the collection, use and disclosure of personal information, and impose obligations on organisations to maintain accurate, complete and up-to-date records, and allow individuals access to, or correction of, information held about them.

The OAIC has published guidelines to assist with the interpretation and implementation of the APPs.

The Information Commissioner has registered and enforces the Privacy (Credit Reporting) Code 2014 (version 1.2). A breach of the Code is a breach of the Privacy Act.

Tort law

Creditors or debt collectors who engage in extreme conduct may expose themselves to civil action in tort by a debtor. Depending on the circumstances, action for trespass, assault, wilful infliction of mental injury, nervous shock and defamation (among others) may apply.

Criminal law

Creditors or debt collectors who engage in extreme conduct may be charged with criminal offences including assault and demanding with menace. A collector who refuses to leave a person’s property may also be charged with trespass.

Other obligations

Debt collectors, who are unsure of their obligations under any of the above-mentioned laws, mandatory codes and other arrangements, should obtain legal advice or seek more information from the relevant regulator. Creditors and debt collectors should be aware of the requirements of any voluntary industry code of conduct that applies and the rules of any relevant trade association or professional body.

107 It should be noted that these laws apply to activities within their respective jurisdictions, even if the collector is physically located in another state, territory or country.

108 Fair Trading (Australian Consumer Law) Act 1992 (ACT), Fair Trading Act 1987 (NSW), Consumer Affairs and Fair Trading Act 1990 (NT), Fair Trading Act 1989 (Qld), Fair Trading Act 1987 (SA), Australian Consumer Law (Tasmania) Act 2010 (Tas), Australian Consumer Law and Fair Trading Act 2012 (Vic), Fair Trading Act 2010 (WA).

109 See s. 45(2), Australian Consumer Law and Fair Trading Act 2012 (Vic).

110 See s. 46, Australian Consumer Law and Fair Trading Act 2012 (Vic).

111 Commercial Agents and Private Inquiry Agents Act 2004 (NSW), Commercial and Private Agents Licensing Act 2002 (NT), Property Agents and Motor Dealers Act 2000 (Qld), Security and Investigation Industry Act 1995 (SA), Security and Investigation Agents Act 2002 (Tas), Debt Collectors Licensing Act 1964 (WA).

112 Property Agents and Motor Dealers (Commercial Agency Practice Code of Conduct) Regulation 2001 (Qld).

113 For example, s. 25 (Harassment), Commercial Agents and Private Inquiry Agents Act 2004 (NSW).

114 See NCCP Regulations r. 21.

115 City of Canberra Arms Act 1932 (ACT), Unauthorised Documents Act 1922 (NSW), Flag and Emblem Act 1985 (NT), Emblems of Queensland Act 2005 (Qld), Unauthorised Documents Act 1916 (SA), Unauthorized Documents Act 1986 (Tas), Unauthorized Documents Act 1958 (Vic), Unauthorised Documents Act 1961 (WA).

116 Limitation Act 1985 (ACT), Limitation Act 1969 (NSW), Limitation Act 1981 (NT), Limitation of Actions Act 1974 (Qld), Limitation of Actions Act 1936 (SA), Limitation Act 1974 (Tas), Limitation of Actions Act 1958 (Vic), Limitation Act 1935 (WA).