Consumer groups support licensing of ‘debt vultures’ but reforms must go further to stop the harm 

While some businesses stepped up to help Australians to recover from the COVID-19 crisis, others sought to profit from people’s desperate financial circumstances.

Unregulated debt management firms (also known as “debt vultures”) promise to help with bills, debts, and credit reports, but often cause more problems than they solve.

Seven leading consumer groups have made a submission to Federal Treasury on draft regulations that would require most debt management firms (DMFs) to hold an Australian Credit Licence. The submission supports the licensing requirement but calls for additional obligations to stop the harm caused by these firms.

“We support the Federal Government moving to require some debt management firms to hold an Australian Credit Licence and join the Australian Financial Complaints Authority (AFCA), which will improve access to justice, but the Government needs to complete the job by introducing tailored rules to clip the wings of debt vultures,” said Gerard Brody, CEO Consumer Action.

“Time and again, our service sees problems with so-called ‘debt management’ firms that already hold an Australian Credit Licence. Licensing alone will not fix the problems or ensure that people get high quality, competent advice that they can trust.

“It’s a dangerous mix: people struggling with rising bills as a result of the pandemic but desperate to be debt-free, and debt vultures promising a quick fix ‘debt solution’ or a ‘clean’ credit report. The reality is that these companies usually charge eye-watering advance fees, fail to put their customer’s interests first and can leave people in financial stress with even less money,” said Mr Brody.

In December, a report commissioned by Consumer Action from Quantum Market Research showed that between 1.4 to 1.9 million Australians paid a debt management firm in 2020, a number that consumer advocates expect to rise this year as temporary COVID-19 support measures are withdrawn.

The research results revealed Australians overwhelmingly support DMFs being subject to a  best interests’ duty, minimum education and training requirements, and a ban on advance fees.

“Australians overwhelmingly want the Government to introduce strong protections, including a best interests’ duty, minimum education and training requirements, and a ban on advance fees,” Mr Brody added.

The submission is available here. 

Read the Quantum consumer research report here.



Media Contact: Mark Pearce, Consumer Action Law Centre, 0413 299 567,


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