When Can a Default Be Included in Your Credit Report

Friday, March 29, 2019 - Posted by Michael McCulloch

It's a question that is often asked and something that we have covered before in our article Recording Payment Defaults however is there a time-limit on when a credit provider can list a payment default?

The Office of the Australian Information Commissioner (OAIC) states in their Privacy Fact Sheet 35: When Can a Default Be Included in Your Credit Report -

Yes, a credit provider cannot wait more than 90 days after issuing you with the second notice to list the default.
If the credit provider does not disclose the default to a CRB within that 90 day period, it must send you another notice informing you of its intention to list the default. The credit provider must then wait at least another 14 days before disclosing the default to a CRB for inclusion in your consumer credit report.

You can find the answer to this question and more by visting the OAIC fact sheets page here.

Maintaining a Mail Log and Default Notices

Friday, March 29, 2019 - Posted by Michael McCulloch

You may take it for granted that when a Default Notice is issued that the customer receives the Notice however what would happen if legal action was commenced and the customer defended the action based on not having been issued with a Default Notice? Would you be able to prove service?

The ability to swear an Affidavit that meets the Courts requirements is paramount in having any such Defence struck-out with the Supreme Court repeatedly ruling that where service is effected by post several elements must be proven. These elements include:

1. the envelope bearing the correct name and address of your customer;
2. the envelope containing the relevant documents being served;
3. the envelope bearing the correct cost of postage; and
4. the envelope being placed in the post.

AFCA Rules Consultation

Friday, March 29, 2019 - Posted by Michael McCulloch

In our February 2019 edition of Debt Collection News we reported that the Australian Financial Complaints Authority (AFCA) would be looking at accepting complaints dating back to January 2008. In a recent media release AFCA has now confirmed that they are seeking submissions on the proposed changes to their Rules.

Typo Error Results in Creditors Statutory Demand Being Struck Out

Friday, March 29, 2019 - Posted by Michael McCulloch

In a recent matter before the Supreme Court in Victoria a Creditors Statutory Demand has been set aside by the Court on the basis that the demand was incorrectly addressed.

By way of background the Plaintiff, Mills Oakley, commenced proceedings against the Defendant, Assets HQ Australia, in the District Court in NSW and obtained a Judgment in October 2018. A Statutory Demand was issued in respect of the debt for $158,905.67 which remained unpaid. Pursuant to s459C(2)(a) of the Corporations Act a company is presumed to be insolvent if it has failed to satisfy a Statutory Demand within 21 days of service being effected.

In the proceedings Mills Oakley v Asset HQ Australia Pty Ltd [2019] VSC 98, the Plaintiff relied on non-payment as a presumption of insolvency and commenced wind-up proceedings in the Supreme Court however Solicitors for Asset HQ Australia argued that there was insufficient evidence of the Statutory Demand being served. The basis of this argument focused around:

• the registered companies address being noted as "Pacific Way" rather than "Pacific Highway" on the Demand;
• the company claiming to have never received the Demand; and
• the Plaintiff being able to prove that service was affected by Australia Post.

Veterinary Surgeon Says Unpaid Debts is Stealing

Wednesday, February 27, 2019 - Posted by Michael McCulloch

A veterinary surgeon based in Western Australia has recently come out in the Sydney Morning Herald saying that unpaid invoices for veterinary care is ".... essentially stealing from someone".

Dr Belinda Beynon said that in January 2018 that a distressed woman approached the surgery with 2 dogs that had been bitten by snakes. Having spent 13 years working in an emergency veterinary clinic, Dr Beynon, knew that the procedure would cost the owner a minimum of $3,000. The owner claimed to be unable to pay the full balance immediately and would pay $1,500 upfront and pay the balance within the week.

With both dogs surviving treatment the surgery attempted to contact the owner by phone and mail before referring the debt to a debt collection agency who also failed in their attempts to recover the debt. Dr Beynon wrote-off the debt and put it down to a bad experience.

Recently Dr Beynon said that she had new clients come in with a dog that required treatment however was undecided if she should commence treatment or not. Dr Beynon said that while her professional judgement said to treat the animal her business owner experience told her that they couldn't afford to.

While Dr Beynon was able to eventually authorise the treatment through financial assistance she said in a statement, "What I’ve tried to explain to people in the past ... is that what a vet charges is not always related to the quality of the work that they do. I guess I would say ... if you go into a veterinary practice and you request veterinary care, and you promise to pay something and then you don’t do it, you’re not taking away someone’s holiday to Fiji or a fancy piece of jewellery. That might mean they can’t pay their kids school fees that week. They might not be able to pay the drug bill that week. They’re not getting away with something – they’re essentially stealing from someone. Perhaps if more people gave more thought to the families behind the building and the impact it has, then perhaps they might question their own motives a bit more."

Consumer Action Law Cente - "It's Time to Hold Debt Vultures Accountable"

Wednesday, February 27, 2019 - Posted by Michael McCulloch

You may recall that in our June 2018 edition we published a blog ASIC Warns Consumers About Credit Repair Services. The article focused on a campaign being run by ASIC that was designed to inform consumers of the high level of fees charged by credit repair and debt relief firms. This month the Consumer Action Law Centre (CAL) has released an article, "Stop Debt Vultures", again highlighting the need for regulatory oversight of this industry.

As indicated in the article the credit repair and debt management firms operate outside of any regulatory licensing with no minimum requirements for competency, ethical standards or licensing. The reality of the situation is that anyone, regardless of their level of education, character or background, can start a credit repair business. In a statement to the media Gerard Brody, CEO of the CAL said, "The promise of fixing your debt worries and getting you back on track just doesn’t live up to reality in our experience. The fact is they can charge hidden and high fees, they can mislead about what it is they can do, and leave people in further debt."

With Australian household personal debt being one of the largest in the world, the CAL are asking that ASIC create a robust regulatory framework to ensure that credit repair and debt relief firms are held to a higher standard.

We will continue to monitor developments in this area.

Farmers to Benefit from New Mediation Scheme

Wednesday, February 27, 2019 - Posted by Michael McCulloch

With the Government set to adopt all 76 changes recommended by the Royal Commission into Misconduct in Banking, including amending the Australian Financial Complaints Authority (AFCA) Rules to accept disputes dating back to January 2008, it appears as though farmers will also benefit with the Commissioner calling for a national farm debt mediation scheme.

Both The Weekly Times and Beef Central are reporting that the Federal Treasurer, Josh Frydenberg, has indicated that the Government would look at introducing a new farm debt mediation scheme which would require financiers not to charge default interest on agricultural loans in areas considered in drought or impacted by a declared natural disaster. Financiers would also be required to ensure that only those experienced in agriculture would manage distressed farm loans.

In the original interim report released by Commissioner Hayne he commented, "Properly used, however, mediation may allow the lender and the borrower to agree upon practical measures that will, or may, lead to the borrower working out of the financial difficulties that have caused the lender to treat the loan as distressed. Ordinarily, then, I consider that lenders should offer farm debt mediation as soon as the loan is classified as distressed. If used in conjunction with rural financial counselling services, early farm debt mediation should allow wider and better choices for the lender and borrower about servicing, and ultimately repaying the loan."

Fiona Simson, President of the National Farmers' Federation said, "The Royal Commission shone a bright light on Australia's banking sector, on which Australian farmers are heavily dependent. Justice Hayne's recommendations and the Government's affirmative response, has recognised the unique situations farm businesses often face and the always unequal playing field when negotiating with the big banks."

Minister for Agriculture and Water Resources, David Littleproud, released a statement on his website which you can read here.

AFCA to Accept Complaints Dating Back To January 2008

Wednesday, February 27, 2019 - Posted by Michael McCulloch

Following the final report from the Royal Commission into Misconduct in Banking it has been revealed that the Government is proposing a change to the Australian Financial Complaints Authority (AFCA) Rules which will allow them to deal with disputes dating back to January 2008.

The proposed change would see AFCA being able to investigate disputes about misconduct that have not been dealt with previously by the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) or by the Courts. AFCA has indicated in a media release that consumers and small businesses will soon be provided with information as to the complaints procedure however confirmed that until such as time as the Rules are changed that they cannot consider such disputes.

In a statement to the media AFCA Chief Executive and Chief Ombudsman, David Locke, said, "The announcement from the Government today that AFCA will now be able to consider some of the legacy disputes excluded by the predecessor schemes going back to 1 January 2008, means that many more people will be able to get access to justice and have their matters properly considered. This is a really positive step for consumers and we will be issuing guidance shortly to assist people to bring these disputes to us."

AFCA has also publicly welcomed the Commissioner's recommendation in relation to s912A of the Corporations Act 2001 which will see AFSL holders being required to take reasonable steps to cooperate with AFCA to resolve disputes and release documents.

Use & Access of Electoral Roll Data

Wednesday, February 27, 2019 - Posted by Michael McCulloch

It is being reported by the Sydney Morning Herald that electoral roll data of more than 16 million Australians is allegedly being used by buy now, pay later providers, betting agencies, marketing firms and debt collectors to identify individual consumers.

Data allegedly obtained from a data marketing company, Illion, allows companies such as Afterpay to match identities to addresses as it processes customers. The data is allegedly being accessed under recent changes to the Anti-Money Laundering and Counter-Terrorism Financing Act.

Historically, prior to changes to the way the electoral roll was accessed, the roll was being used by debtor collectors (among others), for the purpose of making enquiries to locate a debtor or verify that a debtor may be residing at an address prior to commencing further action. Changes to the laws prohibited the search of the electoral roll for this very purpose, specifically stating that information contained in the roll is protected information and that such protected information shall not be used for a commercial purpose.

The Australian Electoral Commission would not comment on whether use of the data by the companies involved was appropriate with enquiries being directed to Home Affairs.

In accordance with the Act, LCollect do not access electoral roll data for any commercial purpose and only monitor accounts on legally available search facilities complying with the requirements of the Privacy Act 1988 (Cth).

China Trials Deadbeat Map To Monitor Bad Debts

Wednesday, February 27, 2019 - Posted by Michael McCulloch

Authorities in China are trialling a new app which will enable users to check on their debt status according to ABC News.

The app, which is an add-on to Chinese social media platform, WeChat, has been rolled out in the Hebei province earlier this year. Nicknamed the "Deadbeat Map" the programs allows users to pinpoint the location of those who have failed to pay their debts within a 500 metre radius. Tapping on a person marked on the map reveals personal information about the individual including their name and the reason why they have been placed on the financial blacklist. Other information such as home addresses and identity card numbers are also partially shown.

The launch of the app has not been without criticism with many raising privacy concerns over the app. A representative of the Hebei Higher People's Court said in a statement, "The development and application of the map can further realise the connection and sharing of information on debtors and create a social honesty framework that limits those who lose their credibility in many ways." In response Delia Lin, a senior lecturer in Chinese studies at the University of Melbourne, said, "This is dangerous — it encourages people to take the law into their own hands. The people who cannot pay their debt because they are too poor, then who will be subject to this kind surveillance and this kind of public shaming. Basically, society becomes a virtual prison — instead of going to jail, those people's personal lives, and even their children's personal lives, are being affected."

China has been developing a social credit score system since 2011 with the aim of separating the "trustworthy" from the "disobedient" with behavour ratings then used to determine access to services ranging from transport to loans. Since its launch more than 18 million people have been banned from flying and 5.5 million prevented from buying rail tickets as a result of their debts.