Both FOS and CIO have identified improper debt collection activity as major complaint issues in their Annual Reports.
CIO said poor debt collection practices included:
- undue debtor harassment,
- practices relating to the collection of statute-barred debts (and potentially flawed procedures for the identification of such debts), and
- the use of non-compliant default notices.
Conduct during the collection process
Guidelines for conduct during the collection process are set out in the ASIC and ACCC Joint Debt Collection Guideline: for collectors and creditors (RG 96).
Separately ASIC has announced that National Australia Bank (NAB) has made changes to its debt collection practices following ASIC concerns that some of NAB’s collection letters may have been misleading, deceptive or unconscionable.
ASIC was concerned that NAB was sending debt collection letters to customers using letterheads for “Fairhalsen Collections” and “Brunswick Collections Services”, which may have given the incorrect impression that NAB had sold, outsourced or otherwise escalated a debt when this was not the case. These letters only disclosed that the entity was a division of NAB in fine print at the bottom of the page.
ASIC was also concerned that letters sent to some customers during the collection process stated that if the debt was not paid, or contact made:
- legal proceedings for recovery of the entire debt might commence without further notice and that such proceedings could result in a judgment being entered and/ or bankruptcy;
- a debt collector might visit the customer’s home to collect the debt; or
- NAB might use any other legal action necessary to collect the debt.
In response to ASIC’s concerns NAB has removed from its collection letters:
- references to Fairhalsen Collections and Brunswick Collection Services
- representations in relation to face-to-face contact, legal action and bankruptcy (unless such action is likely to occur).
Watch my Debt Collection Conduct video
