ASIC has reviewed the debt collection practices of New Zealand-based debt collector EC Credit Control Pty Ltd (EC) and they have changed their debt collection practices consistent with the joint debt collection guidelines published by ASIC and the Australian Competition and Consumer Commission (ACCC) (the Guidelines).

ASIC’s review of the company’s practices raised substantial concerns about EC’s operations, namely:

• continuing to collect on a credit card debt incurred in New Zealand after both the debtor and the Trustee in Bankruptcy had advised EC that the debt was included in the debtor’s bankruptcy petition filed in Australia
• ignoring communications from the Insolvency Trustee Service Australia (ITSA) to cease further collections activity
• misleading debtors in its written correspondence by:
  • threatening debtors with legal action when not intending, or not holding instructions, to take such action
  • threatening to list defaults with Australian credit reporting agencies when not entitled to do so
  • misrepresenting the correct legal process and enforcement options available when collecting debts incurred in New Zealand
  • using at times inappropriate and aggressive tone in its emails to debtors.

Following ASIC’s intervention, EC has reviewed and updated all relevant internal collections procedures and standard form collection letters, developed and implemented an internal dispute resolution scheme, appointed a training manager to provide training to its staff, implemented a telephone call recording system and sent apology letters to 236 consumers who may have been affected by the misleading correspondence. EC has also written to ITSA, acknowledging its mistake.

The resolution of these issues is consistent with ASIC’s priority to assist and protect retail investors and consumers in the financial economy.

ASIC acknowledges the cooperation of EC in responding to and resolving these issues.

Further information for debt collectors and creditors can be found in the joint publication by ASIC and the ACCC, Debt collection guideline: for collectors and creditors, dated October 2005, which is available at www.asic.gov.au or by phoning the ASIC Infoline on 1300 300 630.