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The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have published an updated guideline for Collectors and Creditors and a guide for dealing with debt collectors for consumers.

We encourage debt collectors and creditors to review their manuals and collection processes to ensure compliance with the guidelines, and in particular to ensure they reflect the provisions and any changes arising from the Australian Consumer Law, the National Credit Protection Act 2009 and privacy laws and principles.

In short, the updates to Debt Collection Guideline for Collectors and Creditors include (but are not limited to):

• additional guidance on interactions with debtors experiencing family violence and including family violence as an example of a reason where debtors may be unable to make substantial repayments or are otherwise vulnerable;
• inclusion of case studies to illustrate contact for a reasonable purpose, disputed liabilities, and representations about the consequences of non-payment;
• an update to the definition of ‘personal information’ under the Privacy Act;
• a specification that original creditors and any of their assignees should ensure that the terms of an assignment include adequate processes to enable the timely provision of information to a debtor or authorised representative;
• clarification that a debtor must be informed in writing when an original creditor sells or assigns a debt;
• clarification that any collection activity is to be suspended if liability is disputed;
• a guide to distinguish credit contracts regulated under the National Consumer Credit Protection Act 2009;
• guidance on contact via social media platforms and the frequency of such contact;
• an update to infringement notices and penalties; and
• an update to the Authority Form developed by Financial Counselling Australia.

The updates to the guide Dealing with Debt Collectors: Your rights and responsibilities include:

• warnings about debt management firms that charge high fees for services; and
• an update on methods and ways debt collectors can contact a debtor.

The updated guides may assist creditors and debtors in light of the temporary debt relief measures implemented due to COVID-19 ceasing to have effect from 1 January 2021.  This means the minimum debt threshold for creditors to apply for a bankruptcy notice has been reduced to $10,000 for individuals and the minimum debt threshold for creditors to issue a statutory demand against a company has reverted to $2,000.  The time frame for a debtor to respond to a bankruptcy notice or creditor’s statutory demand is 21 days.

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