More than half of all Australians have found themselves in some form of financial stress. Increasing numbers of people are facing energy poverty, food insecurity, delayed medical treatment and housing insecurity.
Calls to the National Debt Helpline have increased by 25% in the last financial year. When everyday Australians go to the wall, there is one sector that gets more business: the private debt collection industry.
In a new investigation, Guardian Australia has put the industry under the spotlight, and examined whether regulators are doing enough to enforce rules and crack down on misconduct.
The investigation has unearthed shocking revelations:
Panthera Finance, one of Australia’s biggest privately owned debt collection businesses, has ignored a five-year “blacklisting” from the Victorian regulator and continued to buy debts despite being warned that continuing to purchase and collect debts would be a criminal offence. The regulator has so far taken no action.
A former debt collector with 15 years’ experience in the industry says that some of the conduct he was involved in would “horrify” the general public. He claims he once issued a threat to seize the home of a rape victim whose husband had just died, and in another case dispatched an agent to a child’s school in a last-ditch effort to find a debtor.
Community legal services report debt collectors making false and misleading threats about a person’s credit rating to get them to pay and using underhanded tactics to extend the usual six-year time limit on collecting debts.
The Australian Financial Complaints Authority says it has heard complaints of intimidating communication and of debt collection continuing while the authority is investigating, which is not permitted.
Afca also says complaints about debt collectors and buyers increased 9% last year, although specific complaints about inappropriate debt collection practices went down.
The industry peak body disputes the rise in complaints – it says its own data analysis shows steady reductions year-on-year since 2020, although this data does not include complaints that are resolved in their early stages before Afca’s involvement. The peak body claims less than 1% of complaints are substantiated to show any fault by the debt collector.
In the words of one debtor who alleges harassment and mistreatment, a “massive power imbalance” exists between debt collectors and their targets.
Without effective regulation and public scrutiny of the sector’s actions, this imbalance risks leading to significant harm for society’s most vulnerable people.
