Creditors proceed with caution: ASIC and ACCC update debt collection guidance

  • TurkAlert
  • Published 03.05.2021

Key Takeaways

On 13 April 2021, ASIC and the ACCC jointly published an updated debt collection guide for creditors and specialist debt collectors.

The guidance reinforces that ASIC and the ACCC encourage flexible and realistic debt arrangements, that account for and prevent further hardship, including indirect forms such as family domestic violence.

In addition, the guide emphasises that misleading debtors is a contravention of the regulatory framework.

The regulators are particularly focused on misrepresentations as to actions that cannot or are not intended to be taken to collect debts. This may include threats to take legal action where legal action is not possible, for instance, because the debtor is bankrupt, the debt statute barred, or legal action is not intended or not under consideration.

They are also mindful of the provision of incorrect information to debtors such as stating failure to pay a debt is a criminal matter that may be referred to police, or indicating basic household items can be seized to repay debts.

Interestingly, the guide encourages creditors to consider the appropriateness of assigning disputed debts, and if they do, requires they provide assignees with sufficient information about the dispute.

Implications

The updated guide is an important reminder that regulators are continually assessing creditor conduct and approach to debt recovery, especially in the aftermath of COVID-19 and consequent adversity, whilst being more likely to take action for contraventions than previously.

Given the potential significant financial penalties and reputational risk arising from contraventions, creditors and debt collectors should seek legal advice if they are uncertain about whether their recovery practices comply with the guidelines or if they require compliance training.

Helpful Link

For more information and a copy of RG96 you can download a copy of the guide at the following link:

https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-96-debt-collection-guideline-for-collectors-and-creditors/

Michael Jacobs

Special Counsel

P: 03 8600 5025

Email Michael