In plain English: Australian debt collection guidelines

What are the guidelines around debt collection in Australia?

No business wants to be faced with enforcing debt collection, but if your clients aren't responding to your payment requests, you may need to take action. Outstanding payments affect your cash flow and ability to cover your own expenses, which can have serious consequences.

Debt collection refers to the ways in which you, or a specialised debt collection service, attempt to recover the credit owed to you. In Australia, there are a number of guidelines for businesses and agencies alike, which ensure that organisations have a number of debt collection avenues open to them, but that consumers remain protected where appropriate.

The overarching rule of debt recovery is that the business involved must not breach Commonwealth consumer protection laws.

What are Australia's debt collection guidelines?

Australia's debt collection guidelines are a number of stipulations from the Australian Competition and Consumer Commission (ACCC) and Australian Securities Investments Commission (ASIC) about how businesses should manage the recovery process. In short, they cover the ways in which a business should communicate with the debtor and what constitutes as unfair treatment or harassment.

The overarching rule of debt recovery is that the business involved must not breach Commonwealth consumer protection laws. Using the guidelines set out by the ACCC and ASIC, organisations ensure they are following best practice and abiding by consumer protection laws.

Key features of the debt collection guidelines for creditors

As a creditor, one of the most important things you must keep in mind is that your communications must remain professional and fair. Any action you take that could be construed as harassment, coercion or deliberately misleading could mean you're not complying with consumer protection. Should you choose to employ a debt collection agency, you can also be held accountable for their actions.

The debt collection guidelines accept that those owing should take responsibility. However, they also require that you only contact the client about the debt when it is necessary to do so, and that your communications are reasonable. Your legal rights include sending details of include sending details of the outstanding debt and requesting settlement, or providing details of a payment plan you're willing to work with.

Communications should be kept to sociable hours and allow your debtor a reasonable amount of time to respond.

Your communications should be kept to sociable hours, allow your debtor a reasonable amount of time to respond, and not impact their right to privacy. The guidelines suggest no more than three contacts per week, or 10 per month. Unreasonable contact could count against you as harassment or coercion. It is acceptable for your debtor to ask you not to contact them via certain methods, such as at work, and you must take such requests seriously.

While you are allowed to contact your debtor by phone or face to face, you must take care to establish the identity of your client before talking to them in detail. As part of their right to privacy, you should not disclose your identity to other parties during your efforts to reach your client, where it would be obvious that they are in debt.

It is not acceptable to harass the debtor or use threatening language or behaviour, and nor is the use of physical force. At no point are you allowed to take advantage of any form of weakness, disability or vulnerability – including those that develop during your attempt to collect the debt.

These guidelines also cover your communication with your debtor's partners and family members, both professional and personal.

Managing debt collection practices

Should you determine that it is both fair and reasonable of you to expect payment, and you have so far complied with Australia's debt collection guidelines, the next steps involve legal proceedings. Involving the courts mean that your debtor could be ordered to settle the bill, and the most serious measures could involve issuing bankruptcy or seizing assets.

However, legal proceedings should be a last resort. Where your dispute resolution has failed, or you're unable to dedicate adequate time to it, a debt recovery service may be the solution you need. Debt recovery agencies have tried-and-tested collection processes and are experienced in negotiating with debtors, protecting client relationships and assisting with legal proceedings, if they really are necessary. An agency can also dedicate a significant amount of resource to recovering your debt as quickly as possible.

Outsourcing the effort to an agency also signals to your client that you'll take measures to recover their debt, which in itself could change their perspective.

Coface debt collection services provide a flexible solution that allows you to maintain good customer relations while recovering what's owed to you. We have experiencing in working around the world, navigating cultural customs and international laws to ensure a speedy resolution. You'll maintain full oversight with our online tracking system, which you can login to at any time to see how your case is progressing.

Contact us today for further information about how we can help you manage your debtors.