Debt Management Firms: new principles and compliance measures
5 May 2021
The ABA has welcomed the Federal Treasurer’s release of new regulations that licence debt management firms on 30 April 2021, a change called for by the ABA.
ABA CEO Anna Bligh said, together with changes made last year by the banking sector, these new regulations would will strengthen protections for customers.
“I welcome these changes from Treasurer Josh Frydenberg and believe they’re a necessary protection for customers and an important step for the industry,” said Ms Bligh.
“It’s vital that consumers don’t become victims of predatory credit practices in the debt management industry. These new regulations and stronger compliance measures will help prevent Australians from being ripped off.”
When calling for these changes, the ABA noted that regulators had found debt management firms let customers down by charging high fees, offering regulated services even though they were unlicensed, using high-pressure sales tactics and providing little information about risks.
“It’s vital that consumers don’t become victims of predatory credit practices in the debt management industry. These new regulations and stronger compliance measures will help prevent Australians from being ripped off.”ABA CEO Anna Bligh
In 2020, the ABA developed an industry approach, in conjunction with consumer representatives, for when Australian banks should deal with debt management firms.
The purpose of the approach is to protect customers by ensuring they are getting the right information from the bank at the right time, including information about free alternative services.
The approach was codified in the Banking Code of Practice as of 1 March 2021.
“If you’re concerned you are being coerced or taken advantage of financially, I encourage you to contact your bank.” ABA CEO Anna Bligh
“Once conditions ease, it’s important for anyone impacted to know their bank is ready to provide assistance”