Thursday, June 28, 2018 - Posted by Michael McCulloch
The Attorney Generals Department has recently released a discussion paper regarding the relationship between consumer credit reporting and hardship.
The purpose of the paper is to examine whether hardship is currently treated adequately under the credit reporting provisions in Part IIIA of the Privacy Act, whether there are opportunities for reform and if so what reforms are appropriate.
The Attorney Generals Department did stress that the paper is not a general review of repayment history information in the consumer credit reporting system.
Source: Attorney General's Department - April 2018
Wednesday, November 23, 2016 - Posted by Michael McCulloch
As part of our continuing commitment to improvement and innovation we are currently in the process of redesigning the LCollect website. Our current site will remain live during this period with no service interruptions.
As the day-to-day users of our website we are seeking your feedback about what we currently do well on our website, what we need to improve and what you would like to see when you visit our site.
You can complete our feedback survey here.
Alternatively please contact us and let us know your thoughts.
Tuesday, August 25, 2015 - Posted by Michael McCulloch
We often come across examples where requests are made to our office for the issue of Default Notices. Having reviewed the request we then find that the same debtors have been issued with the same Notices several times over the course of their loan.
Effectively as a Creditor you are teaching the debtor to pay upon receipt of the Default Notice and not as their Contract stipulates. The debtor will often make contact, make arrangements to clear the arrears however fall into arrears again. The next month you will be issuing another Default Notice, the debtor will contact and make an arrangement and the cycle continues. As a Creditor how can you end this cycle and take control of the account?
Under Section 94 of the National Consumer Credit Protection Act 2009 the debtor can propose an application, verbally or in writing, to postpone action under a Section 88 or Section 90 (i.e. they make an arrangement to clear the arrears). The application must be made by the debtor prior to the s88 or s90 Notice expiring.
As the Creditor you must respond to the request made by the debtor within 21 days of the application and advise of the decision, either accepting or declining the application, the name of their relevant EDR scheme and the debtors rights under the scheme.
What happens though if you wish to accept the debtors proposal but don't want to get caught in the cycle of issuing another Default Notice?
As a Creditor you can issue a Section 95 Notice of Postponement under the Act.
This Notice indicates to the debtor the conditions of the postponement and advises the debtor that the Creditor is not required to give any further Default Notice under the NCCP Act. The Notice however only applies to the debtor that originally negotiated the postponement and does not apply to other debtors, mortgagors or guarantors under the Contract unless these parties have consented to the negotiated postponement.
You can find out more about this service by contacting us.
Monday, July 27, 2015 - Posted by Michael McCulloch
Often we are asked how do you get results in debt collection.
The answer is a fairly easy one. Discover the problem and resolve the issue. This is where communication skills are the key to your success. Treat each debtor with a level of respect and dignity and find positive ways in which to obtain payment.
Think of the human brain as a tape recorder. While we as people may forget certain events the brain remembers and will still react to a situation, often attaching a feeling, to this event. This is the way their brain has been trained and unfortunately for us often the debt collection event is attached to an emotive feeling. Feelings of despair, anger or frustration, etc
Our role as debt collectors is often to re-train the debtor and attach a positive feeling to our communication. So how do we do this? We need to look at Transactional Analysis.
Everyone has 3 ego states:
Parent Ego State
This is a nurturing and judgemental state. The parent ego state corrects us and guides us. They tell us what to do, when to do it and how to do it. The parent ego state can be critical.
Adult Ego State
This is objective and logical thinking. This is where information is sorted, decisions made and problems solved.
Child Ego State
This is our emotional side. All of our emotional responses develop from this state including anger, revenge, happiness, love, hate, etc
So how do we re-train the debtor?
We communicate with words that come from the adult ego state. We are logical, ask questions that start with WHO, WHERE, WHAT, HOW and WHY. These information gathering questions solve problems. The more we stay in the adult ego state the better chance we have of getting the debtor into the same ego state and getting a positive result and payment.
If we communicate with the debtor where we take an parent ego state the debtor will immediately go into a child ego state. The result is one where the debtor will typically lose control and your account remains unpaid, complaints made and generally no progress is made.
How can we get the debtor back from the child ego state?
Place the Call on Hold:
Re-evaluate the conversation. Return to an adult ego state and start asking the right type of questions.
Discontinue the Call:
Re-evaluate where we went wrong and how we can improve the next time we speak to the debtor or on the next account.
Transfer the Call:
The debtor will go immediately back into the adult ego state. You've allowed the debtor to calm down and they will look forward to speaking with another person.
By utilising these tools you will collect more debts, reduce complaints and make the debtors experience with you a positive one.
Friday, June 26, 2015 - Posted by Philip Harvey
With the conclusion of the financial year upon us, it is a good opportunity to reflect on the past 12 months and give some insights from our perspective into the industry, and reflect on some of the milestones and changes to the industry:
- The CIO's (previously COSL) refusal to deal with certain credit repair companies. This was a welcome change of approach. However we note that a majority of our consumer credit clients / AFSL licensed clients are members of FOS. To our knowledge this approach has not been replicated with FOS. It will be interesting to see how legislators and regulators deal with this space moving forward. The ACCC has also identified this in its research report into the industry.
- Feedback from our clients is that competition to lend money is fierce at all levels. Those successfully marketing to their target market / niche are able to grow their lending portfolios.
- Generally arrears provisions are down. With interest rates at prolonged historical lows, clients are reporting exceptionally good arrears results. A large proportion of accounts that do get written off are bankrupts where no previous indication of financial distress was know with no opportunity to identify an account in hardship to assist the borrower. This is also reflected in historically low volumes of actions through the various courts. Interestingly in the courts, they are also experiencing a reduction in insurance claims.
- In December, a number of our clients for the first time initiated policies of halting all collection action (excluding phone calls, contact and reminder letters) in the lead up to Christmas, with instruction not to recommence until varying times in January. The principle reason cited for this was brand management and brand protection. (The natural flow on from this can be delays of 6-8 weeks in a matter such as obtaining vacant possession of a property which may raise other issues).
- In our commercial collection space, for new clients our biggest issue continues to be clients not correctly setting up their lines of credit, not performing basic company searches, director searches to properly inform themselves as to who they are dealing with. When these searches are performed and guarantees are taken, an asset search of the director is not undertaken to actually understand the benefit of the Directors Guarantee. What appears at first glance to be a good collection prospect unravels quickly once the proper searches are undertaken. Similar to consumer credit, some clients are experiencing no warning of clients financial distress until the appointment of a liquidator.
- The ACCC research paper into the debt collection industry is a must read for all parties in credit control and debt collection. We raised this last month, you can download a copy on this link.
- In NSW, the Government released its report into debt collection, and QLD commenced a negative license regime for phone collectors in QLD.
- The ACCC and ASIC published a new guide to Debt Collection in July 2014. This provided new guidance in handling emerging technologies.
- The Privacy Principles were updated.
Remember that if you would like to see more articles like this in the future please contact us so our content continues to grow and provides you with the latest in debt recovery news, tips and advice.