Why Guardian Australia is investigating the private debt collection industry | debt collection

More than half of Australians have found themselves in some form of financial stress. An increasing number of people face 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 ordinary Australians go broke, there’s one sector that generates more business: the private debt collection industry.

In a new investigation, Guardian Australia put the industry in 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 largest private debt collection companies, has ignored a five-year “blacklist” by the Victorian regulator and has continued to buy debts despite being warned that continuing to buy and collect debts would be a Criminal offense. So far the regulator has not taken any action.

  • A former debt collector with 15 years of experience in the industry says some of the conduct he was involved in would “horrify” the general public. He claims that he once threatened to seize the home of a rape victim whose husband had just died, and in another case he sent an agent to a child’s school in a last-ditch effort to find a debtor.

  • Community Legal Services reports that debt collectors make false and misleading threats about a person’s credit rating to force them to pay and use underhanded tactics to extend the usual six-year time limit for collecting debts.

  • The Australian Financial Complaints Authority says it has heard complaints of intimidating communication and debt collection continuing while the authority is investigating, which is not permitted.

  • Afca also says complaints about debt collectors and debt buyers increased by 9% last year, although specific complaints about inappropriate debt collection practices decreased.

  • The peak industry body questions the rise in complaints: it says its own data analysis shows consistent year-on-year reductions since 2020, although this data does not include complaints that are resolved in their early stages before Afca’s involvement. The highest body states that less than 1% of complaints are substantiated to demonstrate any fault on the part of the debt collector.

In the words of one debtor alleging harassment and mistreatment, there is a “huge power imbalance” between debt collectors and their targets.

Without effective regulation and public scrutiny of the sector’s actions, this imbalance risks causing significant harm to the most vulnerable people in society.