On November 9th, the Minister of Home Affairs, the Hon. Walter H. Roban will table the Bill entitled: ‘Debt Collection Act 2018’. The Bill provides a comprehensive licensing regulatory framework for those entities engaging in Debt Collection.
This Bill represents the first tranche of proposals to address the Government’s 2017 Throne Speech commitment to, “introduce regulations for debt collection agencies; regulate payday lenders who lend money at extraordinary interest rates; and bring banking, insurance and other financial service conduct under the umbrella of an updated Consumer Protection Act.”
Further legislation will be proposed at a later date to address consumer services provided by the banking, insurance and other financial service industries after consultation with the public and private sector stakeholder groups.
The purpose of the Bill is to provide legislative provisions that will govern the whole debt recovery process and provide for legal enforcement by Consumer Affairs as the Licensing Authority. This Bill will ensure that inadequate or unfair debt collection processes are addressed, such as:
The proper verification of debt, which will require that the debt collection agency:
- have proper documentation from the creditor to verify the debt is owed,
- recognise the debtor’s right to review the paperwork from the creditor,
- provide proper accounting of debt and interest repayments documentation to the debtor.
The Bill will make the following practices unlawful. These contraventions will also extend to all creditors:
- Predatory lending, including: applying excessive interest rates and penalties that cause or is likely to cause substantial financial harm not reasonably avoidable by the debtor;
- Misrepresenting or deceiving a debtor by making false statements, lying to a debtor or in any way using deceit in his or her attempt to collect the debt;
- Making harassing phone calls;
- Using deceptive documents;
- Misrepresenting the amount owed;
- Providing information with third parties without the express consent of the debtor
On July 27th, 2018 the Ministry of Home Affairs launched a public consultation on the proposed implementation of the Debt Collection Bill 2018. The consultative process ran for a six week period ending on September 14, 2018. Submissions were received from four organizations representing their members’ input, three law firms, five local businesses and one individual. The Minister of Home Affairs wishes to express his sincere thanks to those who took the time to participate in the consultative process. Their contributions were invaluable in helping shape the Bill, and amendments have been made where appropriate based on their input. Those who contributed to the consultation will see changes to reflect part or all of their recommendations within the Bill.
Some of the more significant elements of the Bill are, as follows:
- Debt Collectors will be required to have trust accounts and proper accounting practices.
- Debtors will now have the right to lodge a complaint against debt collectors with the Authority who will investigate and apply the appropriate remedy.
- Fees and commissions charged to the debtor will now be legislated. The Bill only allows debt collection agencies to charge a commission fee to the maximum of 20% of the original amount of the debt payable only once. A monthly administrative fee can be charged to the maximum of 2% of the debt outstanding payable only if administrative costs arise that relate to the necessity for the debt collector to communicate with the debtor in that month.
- Debtors will have the right to validate the debt paperwork sent by the creditor and to dispute the debt or any portion of it.
This Debt Collection Bill 2018 encompasses the Government’s firm commitment to protect the rights of consumers by enacting legislation which contains basic obligations owed by those who provide credit and debt collection services.