An ASIC surveillance found that Cash Converters Personal Finance Pty Ltd ('Cash Converters') had systematically failed to meet regulatory guidelines on debt collection practices, including by too frequently contacting consumers.
ASIC found that as a result of poor internal controls and policies Cash Converters routinely breached Regulatory Guide Debt collection guideline: for collectors and creditors (RG 96), which recommends that consumers be contacted regarding a debt not more than three times per week or 10 times per month. These guidelines are based on legislative prohibitions on harassment and coercion.
Cash Converters also provided incorrect information to consumer credit reporting agency Equifax. This may have resulted in up to 38,500 customers being reported with inaccurate amounts owing over a one-month period.
In response to ASIC’s concerns, Cash Converters is outsourcing all debt collection work to a specialist third party debt collector. ASIC has also imposed licence conditions on Cash Converters to require it to obtain ASIC’s consent before returning debt collection activity in-house. Cash Converters has also worked with Equifax to ensure all incorrect credit listings have been removed.
The company has paid a $650,000 community benefit payment to help fund the National Debt Helpline. The Helpline assists consumers who have trouble managing debt or paying bills.
ASIC Deputy Chair Peter Kell said, 'Consumers expect to be treated fairly and in a manner that complies with consumer protection laws. ASIC expects all financial service providers to have appropriate systems and controls in place to ensure that debt collection practices are consistent with the Guidelines. It is also critical that licensees ensure that credit information provided to credit bureaus is accurate.’
Consumers seeking assistance can contact the National Debt Helpline on 1800 007 007.
Background
Safrock Financial Corporation (Qld) Pty Ltd, a related company to Cash Convertors, was responsible for providing the incorrect information to consumer credit reporting agency Equifax. The credit listings indicated the total amount of the debt owing by consumers, rather than the outstanding balance.
ASIC has issued Regulatory Guide RG 96 Debt collection guideline: for collectors and creditors setting out guidance to help creditors who are directly involved in debt collection and specialist external agencies who provide debt collection services to comply with their legal obligations under Commonwealth consumer protection laws.
The National Debt Helpline, coordinated by Financial Counselling Australia, is a not-for-profit service that assists consumers in managing debt. Approximately half of the calls received by the Helpline involve debt collected by a debt collection agency. The volume of calls for the Helpline has increased each year since the inception of the Helpline in 2012. The Helpline currently receives, on average, over 14,000 calls per month.
ASIC’s MoneySmart website has information about dealing with debt collectors, including how and when they can contact consumers. MoneySmart also provides guidance for consumers about checking and correcting any wrong listings on their credit report.
Consumers who have experienced debt collection or credit listing issues should contact Cash Converters on 13 22 74. In the event a satisfactory solution is not reached, consumers may lodge a dispute with the Credit and Investments Ombudsman Limited on 1800 138 422.