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New collection guidelines: Defining acceptable debt collection conduct in Australia

In July 2014 revised guidance was issued to help Australian creditors and collectors understand (and adhere to) acceptable standards in the collection of debt. To avoid significant penalties from unintentionally breaching the law, businesses involved in debt collection are encouraged to familiarise themselves with the major changes and implications of the revised guide.

First published in 2005, Debt Collection Guideline: For Collectors And Creditors was collaboratively developed by the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) – the parties jointly responsible for administering consumer protection legislation for the debt collection industry.

Why the need for reform?

The new Guideline reflects a range of industry developments including the introduction of the National Consumer Credit Protection Act 2009, the Competition and Consumer Act 2010 and new privacy laws and principles. To enable practical and applicable reform, the Guideline is the result of extensive consultation with industry and consumer groups.

So what’s new?

With a focus on best practice, the 2014 Guideline dictates more stringent criteria in all interaction with debtors and provides practical advice aimed at mitigating conflict and broadly improving industry standards.

It clarifies the legal rights and obligations of all debt collection parties, demonstrating the fine balance necessary between assuring legal protection for debtors and safeguarding the rights of creditors to ensure debts are repaid.

Most notably the revisions examine what constitutes appropriate contact with debtors, and addresses the emergence of social media and other technologies in the debt collection process.

Defining appropriate debtor contact

The new guidelines describe in detail the type of conduct that is considered appropriate– including reasonable contact hours, methods and frequency.

Considerable focus in the revision is placed on ‘attempted contact’ – reflecting industry consensus that multiple attempted contacts can be as distressing as actual contact. The Guideline also stipulates more stringent boundaries on reasonable contact hours and stresses the importance of maintaining accurate recordkeeping for all contact – successful or otherwise.

Introducing social media for debt collection

The emergence of new technologies since 2005 (such as automatic dialers and a range of social media platforms) has greatly impacted debt collection practices across the industry. The 2014 Guideline offers insight into specific pitfalls to avoid when using these and other emerging technologies.

Taking responsibility

Reference is also made to the need for shared responsibility in achieving favourable outcomes in debt collection. To this end, emphasis is placed on creditors acting responsibly in assigning credit terms and limits, and in approaching debt collection in a flexible, fair and respectful manner. Equally, the Guideline stresses the benefits to all parties when debtors act promptly and responsibly in accruing and repaying debts.

More information

Additional information and a copy of the revised Guideline can be obtained on our resources page. To discuss your debt collection and credit control requirements or to learn more about regulatory compliance, contact BCM.

This article originally appeared in Money in Business.

Published 2 October 2014 at 7:00AM by Natalie Walker