Submission - Credit Reporting Regulatory Framework: Submission to ALRC Privacy Inquiry (December 2007)

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2.14. Debt collection and the sale of debts

This section discusses issues that might arise where there is a connection between debt collecting, debt assignment and credit reporting. Examples include the use of listing defaults as a threat in debt collection, and the inappropriate re-listing of debts when they are sold.

The law appears to be reasonably settled here and debt collection is specifically included in Part IIIA as a permissible use of credit reporting information – although information is to be supplied by credit providers rather than by a credit reporting agency. However, there have been some problems in the past with the specific practices of debt collectors and there have also been some systemic problems regarding data accuracy when debts have been sold.

Industry is keen for debt collection agencies to continue to have access to credit reporting information:

Access to the credit reporting system in debt collection is necessary for the credit industry to function efficiently. Concerns about access to, and use of credit information by industry participants can be addressed through regulations that focus on proportionality and prevention of harm. In particular, placing higher obligations on credit providers through more comprehensive subscriber agreements and rules of reciprocity will act to prevent misuse of this capability.[54]

A key improvement in this field is the ALRC proposal in DP72 that all organisations who access credit reporting information will have to belong to an approved EDR scheme, and this could potentially include debt collectors and the organisations who purchase debts.

In DP72, the ALRC notes that debt collection practices are also regulated by the ACCC and the Australian Securities and Investments Commission (ASIC) through the Debt Collection Guideline: For Collectors and Creditors.[55] The ALRC therefore appears unwilling to add any further provisions regarding the conduct of debt collectors:

It may not be effective or appropriate for the Privacy (Credit Reporting Information) Regulations to deal with issues that primarily concern debt collection practices.[56]

This Report agrees that access by debt collectors to credit reporting information should be briefly defined in the proposed Privacy (Credit Reporting Information) Regulations. All other matters relating to the practices of debt collectors should be addressed in the Debt Collection Guideline: For Collectors and Creditors. 

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[54] Veda Advantage, Submission to the Australian Law Reform Commission Issues Paper 32 – Credit Reporting, March 2007, page 24, <https://www.vedaadvantage.com/doc_library/63/VedaAdvantage_ALRC_IP32_Submission_March2007.pdf>.

[55] Australian Competition and Consumer Commission and Australian Securities and Investments Commission, Debt Collection Guideline: For Collectors and Creditors, 14 March 2005, <http://www.accc.gov.au/content/index.phtml/itemId/733222>

[56] Paragraph 53.52, DP72.

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