The debt collection guide for collectors and creditors, originally released in October 2005 by the ACCC and the ASIC, reflects relevant provisions of the Australian Consumer Law (ACL) and the ASIC Act covering debt collection conduct.
This guide has since been revised and a new version published, after the ASIC and the ACCC’s extensive consultation with industry and consumer representatives. It now incorporates recent court rulings and realistic examples in order to assist creditors, collectors, and debtors in several areas of concern.
The guideline covers Commonwealth consumer protection laws, such as the ACL, and other relevant legislation. It was developed with particular focus on debt collection from individual debtors. Many of the laws and principles covered and discussed by the guideline, however, are also relevant to the collection of corporate and business debts, particularly small business debts.
Here is a list of key points from the guideline, to help you with the debt collection process:
- Identify yourself when making a contact with a debtor
- You are entitled to make reasonable inquiries when a debtor advises he or she is not able to pay
- Never disclose any information about the debtor to third parties
- Observe propriety when contacting a debtor—contact should be made during reasonable hours of the day (for example, 8 am to 8 pm)
- Avoid contacting a debtor via a method he or she specifically advised not to be used
- Make sure to maintain professionalism at all times when contacting a debtor
- Contact should be free of intimidation or humiliation
- Face-to-face visits should be an option of last resort in debt collection (for example, seeing the debtor at their workplace)
- Never trespass nor attempt to
- If a debtor has introduced a representation, then contacting the debtor personally should be one of your last options
- Upon request, evidence of debt should be presented
- Caution and professionalism should be observed at all times when making representations about the consequences of non-payment or the legal status of the debt
The guidelines, when followed, will help reduce the need for collection activity. When collectors are flexible and fair and debtors prompt and responsible, a realistic debt collection agreement and process will be realised.
They also offer a practical and realistic set of approaches for all parties involved in the debt collection process.
Simply, when you conduct debt collection in an ethical manner, there is already a good chance you are on the right side of the law. However, familiarising yourself with the details and specifics of the do’s and don’ts, as well as the suggested practices, will help you not only legally conduct debt collection but also ensure the probability of satisfactorily completing the process—and even getting a prompt repayment.
Please note, however, that the guidelines set by ACCC do not limit your right, as a collector, to:
- Take legal action to collect a debt
- Conduct legal repossession activities and other forms of legal enforcement of legitimate security interests
- Seek and secure pre-judgment remedies
- Undertake necessary processes involved in these actions.
If the debtor still fails to pay or does not pay, and you are considering to take further action, you may now seek legal advice and/or assistance from authorities.