NAB nabbed for debt collection letters
National Australia Bank (NAB) has changed its procedures of its debt collection practices after concerns from the financial services regulator.
The Australian Securities and Investments Commission (ASIC) was concerned NAB's collection letters may have been misleading, deceptive or unconscionable.
NAB was sending debt collection letters using letterheads for ‘Fairhalsen Collections' and ‘Brunswick Collection Services', which may have given the incorrect impression that NAB had sold, outsourced, or otherwise escalated a debt when this was not the case.
The letters only disclosed the entity was a NAB division in fine print at the bottom on the page.
ASIC was also concerned the letters sent to some customers during the collection process stated that if the debt was not paid, or contract made:
- * legal proceedings for recovery of the entire debt might commence without further notice and that such proceedings could result in a judgment being entered and/or bankruptcy;
- * a debt collector might visit the customer's home to collect the debt; or
- * NAB might use any other legal action necessary to collect the debt.
However, for the majority of the recipients, such action was either unlikely or would only be considered at a later stage in the collection process.
NAB has now removed references to Fairhalsen Collections and Brunswick Collection Services, and representations in relation to face-to-face contact, legal action and bankruptcy (unless such action is likely to occur).
ASIC deputy chairman, Peter Kell said "the threat of legal proceedings and bankruptcy can be very stressful. Collectors must not threaten legal action if such action is not possible, not intended, or not under consideration."
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
