The Australian Banking Association has published Industry Guideline: Sale of unsecured debt to outline safeguards for customers when banks are selling unsecured debt to another party, in addition to the provisions of Chapter 43 of the Banking Code of Practice which governs what a bank will do when it is recovering a debt.

The Guideline is voluntary but it is expressed to reflect good industry practice.

It deals with:

• internal processes, procedures and policies;
• issues prior to the sale of unsecured debt ;
• selection and monitoring of debt buyers ;
• issues on the sale of debt;
• bankruptcy proceedings initiated by debt buyers;
• The threshold for creditor petitions;
• Customers experiencing vulnerability;
• the National Redress Scheme.

The Guideline will commence operation from 1 March 2020. Contractual arrangements with some debt buyers may not be able to be updated until their contracts are renegotiated. Some necessary changes may not be able to be made until after the 1 March 2020 implementation date – where this is the case banks will endeavour to comply with the guideline on a best endeavours basis in the first instance and where it is brought to their attention that they have not complied with the guideline, they will promptly rectify this issue for the customer.