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14-159MR ACCC and ASIC revise guidelines for businesses and consumers about debt collection activities
The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have launched an updated version of their ‘Debt collection guideline: for collectors and creditors’ (ASIC reference: Regulatory Guide 96). This joint publication has been revised, following extensive consultation with key industry and consumer representatives, to provide enhanced guidance to anyone involved in debt collection.
The revised guideline will further assist creditors, collectors and debtors to understand their rights and obligations, and ensure that collection activity is undertaken in a way that is consistent with the important Commonwealth consumer protection laws that the ACCC and ASIC administer. It provides practical guidance about:
when it is appropriate to contact a debtor, including what constitutes contact and reasonable contact hours, methods or frequency of contact
how the need for collection activity will be greatly reduced when debtors act promptly and responsibly, and collectors are flexible, fair and realistic
new communication technologies developed since the initial publication, including the use of social media platforms and auto dialers, and the potential pitfalls to avoid in using such technologies.
The ACCC and ASIC also encourage businesses to incorporate the recommendations of this guideline into their arrangements with agents and assignees.
This publication has been updated to reflect significant changes to the law, such as the introduction of the Australian Consumer Law in 2011, the National Consumer Credit Protection Act 2009, and new privacy laws and principles. It also incorporates recent court outcomes and practical examples to assist creditors, collectors and debtors in areas that have caused concern.
Consultation confirmed that the guideline continues to be very effective in providing clarity about what is and is not acceptable conduct. ‘Creditors and collectors have generally provided ongoing support for this guideline. However, on occasions some creditors and debt collectors go beyond what is reasonable and mislead, harass or act abusively towards debtors. This is unacceptable,’ ACCC Deputy Chair Delia Rickard said.
‘If businesses do not adhere to this guidance issued by the ACCC and ASIC, they risk breaching the law in relation to harassment and coercion, false and misleading representations or unconscionable conduct. These breaches can attract significant penalties,’ Ms Rickard said.
ASIC Deputy Chairman Peter Kell said, ‘It is critical that businesses engaging in debt collection are aware of their legal rights and obligations. Where there are instances of businesses disregarding these important consumer protection laws, we will take appropriate enforcement action. The guideline is designed to help businesses carry out their collection activities in a fair and measured way.’
Since 2002, the ACCC and ASIC have been jointly responsible for administering consumer protection legislation in relation to the debt collection industry. Jurisdiction derives from the consumer protection provisions of the Australian Securities and Investments Commission Act 2001 (ASIC Act), which largely mirror provisions of the Australian Consumer Law (ACL) administered by the states and territories and, at the Commonwealth level, by the ACCC.
The ‘Debt collection guideline: for collectors and creditors’ was initially published in 2005.
Recent regulatory action
In 2011, ASIC commenced proceedings in the Federal Court of Australia against one of Australia’s largest debt collection companies. In 2012, the Court found ACM Group Limited had harassed and coerced debtors and engaged in 'widespread' and 'systemic' misleading and deceptive conduct when recovering money.
In 2013, the ACCC prosecuted a company for setting up a fake complaints-handling organisation to give debtors the false impression that disputes about liability were being assessed by an independent arbitrator. The Federal Court ordered Excite Mobile to pay a penalty of $455,000 and the company’s directors were ordered to pay penalties totaling $100,000 between them.
Regulatory Guide 96 Debt collection guideline: for collectors and creditors (RG 96)
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