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Debt management firms

If you’re in financial difficulty, you can have someone represent you when dealing with your bank.

If you don’t want to deal directly with your bank, you can have someone do it for you. To do this, you just need to provide details in writing to your bank. You can pay for representation or access readily available free representation and counselling (see below). Paid options include the use of a debt management firm (DMF).

When people are in financial stress, it can affect their ability to make good decisions, and make them more vulnerable to rushing into an agreement with a paid representative.


Free Services: if you’re in financial difficulty


Banking Industry Guiding Principles on Debt Management Firms

Australian banks have developed a common approach to communicating with you if your debt management firm (DMF) is not acting in your best interests.

The new guide says that if banks believe that a DMF is not acting appropriately, banks can refuse to deal with a DMF and communicate directly with you, the customer. This will ensure that customers are getting the right information from the bank at the right time.


“AFCA and consumer groups continue to raise concerns with ASIC about the conduct of debt-management firms and the potential harms these entities may cause consumers, including that they may provide unsuitable services and engage in predatory conduct”

– ASIC

Debt Management Firms

Debt Management Firms
A debt management firm (DMF) negotiates on your behalf with your bank to help you out of financial difficulty. Consumer Groups and the regulator (ASIC) have raised concerns about DMFs, as some are unregulated, and they can present in many guises. You may not know you’re employing one.

If you’re in financial difficulty, you have a right to appoint someone, including a DMF. But it’s important to remember that these firms charge fees for their services, so you need to consider if the cost is worth it and look at the free options that are available.

Some use misleading claims
ASIC has warned that some firms charge high fees, make misleading claims about helping customers get out of debt, and provide services which are unnecessary, or available for free elsewhere.

Guide created for dealing with DMFs
It’s not ok for unscrupulous operators to rip people off when they are most in need. That’s why Australian banks have developed a common approach to communicating with customers where DMFs are involved.

 

  • If you have appointed a DMF, banks can still contact you directly, if your representative is not acting in your best interests.
  • Your bank may proactively inform you of the risks of dealing with DMFs.
  • Vulnerable customers, especially including those with language difficulties, will receive clear communications.

The ABA’s DMF Guiding Principles

  • outlines a clear set of guidelines for when the banks may consider that a DMF, when representing a bank customer, is not acting in the customer’s best interests and banks may approach a customer directly
  • provides clarity and consistency in how member banks may deal with DMFs, recognising the importance of preserving a customer’s right to engage them, while trying to protect customers where firms may not be acting in their interest, and
  • describes an approach that is consistent with competition law obligations, the Code and draws on other regulatory guidance such as the ASIC/ACCC Debt Collection Guideline (DCG)/RG 271 and the banks’ general responsibilities to their customers.

Read the ABA guiding principles to debt management firms


Talk to your bank

Talk to your bank if you’re in financial difficulty
AMP

Phone: 1300 130 191
Hardship Assistance: Website

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ANZ

Phone: 1800 351 548
Financial Hardship: Website

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Arab Bank Australia

Phone: 1800 64 64 84
Hardship Assistance: Website

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Bank Australia

Phone: 132 888
Hardship Assistance: Website

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Bank of Melbourne
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Bank of Sydney

Phone: 13 95 00
Hardship Assistance: Website

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BOQ Group

Phone: 1800 079 866
Hardship Assistance: Website

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Bank SA

Phone: 1800 679 461
Hardship Assistance: Website

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Bankwest

Phone: 1300 769 173
Hardship Assistance: Website

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Bendigo and Adelaide Bank

Phone: 1300 652 146
Hardship Assistance: Website

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Citi Bank

Phone: 1300 652 146
Hardship Assistance: Website

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Commonwealth Bank

Phone: 1300 720 814
Hardship Assistance: Website

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HSBC Bank

Phone: 1300 555 988
Hardship Assistance: Website

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ING Bank

Phone: 1300 349 166
Hardship Assistance: Website

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Macquarie Bank

Phone: 1300 363 330
Hardship Assistance: Website

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Me Bank

Phone: 1300 500 520
Hardship Assistance: Website

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MyStateBank

Phone: 13 800 1
Hardship Assistance: Website

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NAB

Phone: 1800 701 599
Hardship Assistance: Website

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Rabobank

Phone: 1800 025 484
Hardship Assistance: Website

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Rural Bank

Phone: 1300 660 115
Hardship Assistance: Website

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St. George Bank

Phone: 1800 629 795
Hardship Assistance: Website

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Suncorp

Phone: 1800 225 223
Hardship Assistance: Website

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U Bank
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Westpac

Personal: 132 032
Small Business: 132 142

Hardship Assistance: Website

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Further reform is needed 

Australian banks support stronger regulation of the debt management industry. 

A number of inquiries have found firms have let their customers down by charging high fees, offering regulated services even though they are unlicensed, using high-pressure sales tactics, and providing little information about risks. 

The ABA looks forward to working with Government and regulators on reform in this area in 2021 to take further action to protect customers from dodgy operators. 


If you’ve already engaged a DMF, you can get free legal advice