20 September 2016
(Debate, 20 September 2016, Legislative Assembly, NSW Parliament)
I am concerned that the Fair Trading Amendment (Commercial Agents) Bill 2016 will reduce consumer protections in debt collecting activities, affecting the most vulnerable people in our community, that is, those who are welfare dependent and struggling to make ends meet. The bill removes the need for debt recovery and repossession agents to be licensed, essentially allowing anyone, other than certain disqualified agents, to carry out debt recovery and repossession activities.
I have consulted with the Redfern Legal Centre, which does a significant amount of work with vulnerable and disadvantaged people who are under pressure from debt. Many of its clients have a low prospect of full-time employment, of earning more than their welfare payments, or of improving their future financial position. Their debts can be from utilities, telecommunication companies, consumer credit for products, or other living expenses. Some people live day to day trying to pay their expenses, with little or nothing left. They may get into debt at times as costs exceed income. Many have complex needs because of drug and alcohol problems, trauma, mental illness, homelessness or intellectual disability, and their debt adds to their cycle of disadvantage.
The Redfern Legal Centre reports that the debt recovery process has serious impacts on vulnerable and disadvantaged people who are under financial hardship. They experience stress and anxiety and often do not have the opportunity to seek advice about their rights when they are contacted by debt collectors. Removing the requirement to license debt collectors and agents will reduce consumer protection by removing what is already a very minimal regulatory intervention that provides basic transparency and accountability in the debt collection industry. The Redfern Legal Centre informs me that without licensing there will likely be more "second tier" debt collection agencies, many of which are not members of the Financial Ombudsman Service of the Credit and Investments Ombudsman. As a result, it will be difficult to make complaints against such agents.
Furthermore, I understand these agencies do not have a public reputation to maintain and that they are inherently less scrupulous. A quick internet search will show promises such as "no collection, no commission". The Redfern Legal Centre has reported harassment which involves some agencies calling family, friends or employers and threatening to commence litigation. I have heard about debt collectors dealing with debtors in an authoritative way, purposely making their rights unclear and discouraging them from investigating their rights. People who are disadvantaged and experiencing financial hardship can be less likely to consider all their options—or even know that they have any—and are especially vulnerable to this sort of harassment. By the time people in debt contact community lawyers, such as at the Redfern Legal Centre, they are often acutely anxious.
Harassment by debt collectors is widely acknowledged, with the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission [ASIC] releasing reports on this issue in 2009. ASIC has guidelines to prevent misconduct and malpractice, but those guidelines do not apply across the board. The Opposition has flagged amendments to retain the licensing scheme for debt collection and repossession agents who deal with the community on a face-to-face basis. The Legal Affairs Committee has recommended that this is preferable as there are greater risks in face-to-face dealings. I will support the amendments.
I hope that the new role of NSW Fair Trading to establish rules of conduct, industry education and investigation of complaints will address the concerns about reduced protections, and I ask the Minister to monitor debt collection closely and work with advocates of vulnerable people in debt. A number of organisations made recommendations to the Legal Affairs Committee on ways to improve accountability in the debt recovery process. I understand the committee made consumer protection recommendations, none of which has been implemented. A key recommendation was to protect Centrelink payments from garnishee enforcement, that is, where the creditor takes money directly from someone's wages or bank accounts. Centrelink payments provide a very minimal fallback income for the most disadvantaged so that they can pay for the most minimal basics such as food, rent and utilities. Without those payments, already poor living conditions can become dire.
I understand that Commonwealth social security law includes broad protection of social security income from recovery or law enforcement, but that is being undermined by lax consumer protections in our State debt collection laws. The State Debt Recovery Office and Housing NSW can garnishee money directly from a social security recipient's bank account without a court order. The Redfern Legal Centre reports of vulnerable consumers who have had their bank accounts cleaned out. The NSW Office of State Revenue can take a vulnerable person's Commonwealth social security payments, leaving the person in need of emergency assistance from their local charity. This situation is absurd. I understand other States protect social security payments, and I call on the Government to follow their lead. Rather than remove the basic level of oversight of the debt collection industry, the Government should be looking at ways to resolve disputes through dispute resolution schemes that help those who are vulnerable to reduce their debt.
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