What are ASIC's and the ACCC's responsibilities for debt collection?
ASIC and the Australian Competition and Consumer Commission (ACCC) are responsible for administering the Commonwealth consumer protection legislation in relation to the debt collection industry.
As a general guide, ASIC's jurisdiction covers situations in which the underlying debt relates to the provision of a financial service, including a credit facility. Debts in relation to the provision of goods and services other than financial services will fall within the jurisdiction of the ACCC.
Debt collection guidelines for collectors and creditors
ASIC and the ACCC originally released their Debt collection guideline for collectors and creditors in October 2005. A revised version of the guideline was published in July 2014, following extensive consultation with industry and consumer representatives. The guideline reflects ASIC and ACCC's views of how relevant provisions of the Australian Consumer Law and the ASIC Act apply to debt collection conduct. The revised guideline reflects significant changes to the law since the original publication. It also incorporates recent court outcomes and practical examples to assist creditors, collectors and debtors in areas that have caused concern (refer: 14-159MR).
The debt collection industry needs to review its practices in relation to old debts, where the legal limitation period has expired, according to a report released by ASIC in September 2005 .
The ASIC report, Collecting statute-barred debts, found that debt collectors making demands for payment of old debts need to do more to avoid the risk of misleading and deceptive conduct, unconscionable conduct and undue harassment.
Statute-barred debts are debts on which the legal limitation period has expired. The limitation period is set under state law and there is some variation across states. The period is usually six years after the debtor defaults on regular payment obligations under the contract, but it can be revived by subsequent payment or acknowledgement of the debt. Where a debt is statute-barred, the debtor can raise that fact as a complete defence in any legal proceedings for recovery.