By Su-Ann Loh
As we head into the end of the calendar year, many of our small to medium business clients take the opportunity to review their books and take steps to chase their debtors so that they can have a clean slate by the time the New Year rolls around.
The debt recovery industry is rife with rumours of unethical collection processes. Many of the rumours may be true but many are also unfounded. If you are looking for a mercantile agency to chase your commercial debts, it is important to ask those in your industry about the reputation of the agency, their success rate and more importantly, if their collection processes comply with the ACCC and ASIC debt collection guidelines. An added value to any debt recovery process is the use of legal services from an associated law firm.
In recent times, the National Australian Bank (NAB) has been reported to have made some changes to their debt collection practices pursuant to ASIC concerns that their letters of demand may be misleading, deceptive or unconscionable.
Their letters of demand stated that where the debt is unpaid or if no contact is made, the NAB may issue legal proceedings without notice which may result in judgment and/or bankruptcy, or the debt collector might visit the debtor’s home for collection, or the NAB might use some other legal action necessary to collect the debt. In addition the heading on the letters of demand referred to Fairhalsen Collections and Brunswick Collection Services, which was not plainly explained as a division of the NAB thus giving the wrong impression that the collection process was being outsourced, or that the collection process has been escalated.
NAB have since amended their letters of demand in relation to face-to-face contact, legal action and bankruptcy, among other things. They have also removed references to Fairhalsen Collections and Brunswick Collection Services.
Whilst it is reasonable to stipulate the consequence of non-payment in letters of demand, ASIC has helpfully used this example to remind collectors that those consequences should not be misrepresented or overstated especially if; for example, legal action is not possible, not intended or not under consideration.
For creditors, this means that as you employ the resources of a mercantile agency to help you with your commercial debt recovery, it is important that you consider the options available to you and communicate your intention in respect of those options in the event of non-payment.
If you would like to talk to someone about collecting your business debts we encourage you to contact Kris Logan, General Manager, of Kearley Lewis Mercantile Agency about membership. He can also be contacted on 03 9629 8777. You can also find out more about Kearley Lewis via their website. Lewis Holdway Lawyers is proudly associated with Kearley Lewis.