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Debt collectors often overstepping guidelines

Financial counsellors say consumers are being harassed by debt collectors who ignore the regulator's guidelines. 

Last updated: 09 November 2021


Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • There is no specific legislation covering the debt collection industry, only a set of guidelines
  • Debt collectors working on behalf of businesses often overstep these guidelines 
  • Agencies that don't belong to external dispute resolutions schemes have a particularly poor track record 

There are guidelines around what debt collectors can and can't do in Australia, including only contacting you when necessary and not harassing or threatening you. 

But these guidelines, set by the Australian Consumer and Competition Commission (ACCC) and the Australian Securities and Investments Commission (ASIC), are just that – they're not legally enforceable laws. 

Some debt collectors simply ignore them. 

Mary's story

We recently heard the story of one woman whose experience with a debt collector, which dragged on for two years, was particularly gruelling. 

"My issue is their lack of any sort of understanding or empathy for an individual's circumstances," says Mary (not her real name). 

"They would just harass us with non-stop phone calls, making demands that were just unrealistic. I tried to negotiate with them, but they would never accept what was being offered. They called my husband at work. They were relentless, unscrupulous."

My issue is their lack of any sort of understanding or empathy for an individual's circumstances

Mary, who was pursued by a debt collector

The debt collector continually demanded that Mary, who was getting by on Work Cover support and had to meet mortgage payments, come up with more money than she had on hand. "I can't give you what you're asking," Mary told them. "I don't have that sort of money." 

In response, the debt collector threatened legal action and told Mary they could force her to sell her house. Fortunately, the Melbourne-based consumer rights organisation Consumer Action got involved, and Mary was able to settle her debt for about half of what the debt collector had demanded. 

'It seems debt collectors do as they please'

Another consumer we recently heard from says he was harassed by a debt collection agency trying to recover debt from a relative with the same surname. 

"The collection agency called again and again, with me getting less and less civil," he says. "Based on my experience it seems debt collectors do as they please, on the phone at least."

(The tactic is known as 'skip tracing', where debt collectors call anyone who might know the person they're after, including neighbours and employers or Facebook connections. It often violates the guidelines, since debt collectors aren't supposed to discuss the debt with anyone but the debtor.)


Some debt collection agencies have a poor record of adhering to consumer protection guidelines.

'A law unto themselves' 

Fiona Guthrie, chief executive of Financial Counselling Australia, says the debt collection industry "has some good players and, sadly, some not so good players". 

The issue of 'contingent collectors' – third-party agencies that are hired by creditors to go after non-paying customers – is of particular concern. (Debt buyers, on the other hand, buy debt from creditors at a significant discount and attempt to recover the full amount. Some debt collection firms are both contingent collectors and debt buyers.) 

Contingent collectors – third-party agencies that are hired by creditors to go after non-paying customers – are of particular concern

The contingent collectors issue "has probably been magnified with more telcos and energy companies outsourcing their debt collection," Guthrie says. 

"Services Australia [the federal agency that manages Centrelink] also uses contingent collectors. This is very concerning, given all of these organisations are dealing with people who are often in vulnerable circumstances. 

"Some contingent collectors seem to be a law unto themselves. There are some smaller companies which are just rogues, but there are also some larger ones that financial counsellors continue to say are hard to deal with, for example, in not recognising family violence or not negotiating affordable hardship arrangements."

Lack of oversight

Guthrie says there's a lack of oversight of contingent collectors by some of the organisations that hire them, all the more troubling because the debt collectors are often going after vulnerable people. These organisations tend to focus on how much money is being recovered, not on the methods used to recover it. 

"They simply accept at face value when the contingent collector tells them that they comply with the debt collection guidelines," says Guthrie. "But that isn't adequate."

Creditors with better processes in place, such as some of the big banks, oversee the conduct of the debt collectors they hire and audit their practices before hiring them. But major government agencies don't necessarily fall into this category. 

We are extremely disappointed that parts of the debt collection industry continue to disrespect consumers

ACCC Commissioner Sarah Court

As a case in point, the Department of Human Services hired the debt collection firm ARL Group to recover money from welfare recipients in 2019–20. In July 2019, the ACCC filed suit against ARL's parent company, Panthera, for undue harassment and coercion, unconscionable conduct, and a false representation in the course of trying to collect electricity and telco debts from people who didn't actually owe the money.  

"Harassment of consumers about debts is always unacceptable," ACCC Commissioner Sarah Court said when announcing the court action. "In this case, we allege Panthera's conduct was particularly egregious as we understand they continued to harass these three consumers after they became aware that they didn't owe any money."

She added: "We are extremely disappointed that parts of the debt collection industry continue to disrespect consumers."

(In March 2020, Panthera was ordered by the federal court to pay $500,000 in penalties.)


Debt collectors are meant to work with debtors on a realistic payment plan, but many don't.

'People are feeling harassed'

Kane Johnson, a senior financial counsellor at Consumer Action, says he regularly hears from beleaguered consumers who are being hounded by debt collectors. 

"Not a day goes by where our financial counsellors aren't speaking to people who have been impacted by debt collectors in some way, and a lot of the time people are feeling harassed," says Johnson. "So it is quite a common occurrence."

Not a day goes by where our financial counsellors aren't speaking to people who have been impacted by debt collectors in some way

Consumer Action senior financial counsellor Kane Johnson

Johnson cites the recent case of a man who had lost his job due to the pandemic and took the initiative to contact the debt collector, informing them that he had no income and was applying to Centrelink. 

"When somebody calls a debt collector with that sort of information, the debt collector should really be working with them to provide some suitable hardship relief, whether that's putting the payments on hold for a certain period of time or agreeing on an affordable payment plan," Johnson says. 

"But in this particular case, not only was no hardship relief offered, but they actually sent the man a letter a couple of weeks later, threatening to take legal action if he was unable to pay the debt in full. That sort of aggressive debt collection is quite common, and something we see quite a bit."

Current guidelines 'not legally enforceable' 

The Panthera case is just one example. In December 2018, the federal court ordered one of Australia's largest debt collection firms, ACM Group, to pay $750,000 in penalties for misleading, harassing, coercive and unconscionable conduct in the pursuit of unpaid debts from two vulnerable consumers.

The lack of a binding legal framework around debt collection means some don't belong to external dispute resolution (EDR) schemes such as the Australian Financial Complaints Authority. 

What we need is specific legislation covering the debt collection industry as a whole

FCA chief executive Fiona Guthrie

"In our experience, many of the problems with the debt collection industry are with debt collectors that are not members of EDR schemes," says Fiona Guthrie. (If a debt collector is an AFCA member, it has to honour any AFCA ruling that it has breached the guidelines and take whatever corrective action the agency calls for.) 

She thinks an overhaul of the system is in order: "What we need is specific legislation covering the debt collection industry as a whole," she says. 

"What we rely on at the moment are a set of guidelines that have been put out by the ACCC and ASIC. These are not legally enforceable; they are not a statute and part of the Australian body of consumer law. A starting point therefore would be to codify the guidelines." 

When can a debt collector get in touch? 

By phone: 

  • No more than three times a week, or up to 10 times a month
  • Monday to Friday, 7:30am to 9pm 
  • Weekends 9am to 9pm
  • Never on public holidays. 

In person: 

  • No more than once a month, and only if you haven't responded to phone calls or other ways to contact you
  • With the above restriction, any day between 9am and 9pm (expect public holidays). 

Email and social media: 

  • Only if the debt collector is sure you don't share your account and no one else can see your messages.

Do you really owe the money? 

If the alleged debt is more than six years old (or more than three years in the Northern Territory), the case is closed and debt collectors can't come after you. 

Being harassed by a debt collector? 

Call the National Debt Helpline on 1800 007 007 for free and confidential advice. You can also report rogue debt collectors to ASIC and the ACCC. 

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