Consumer groups have welcomed a crackdown on debt vultures by National Australia Bank (NAB).
In a statement today, NAB says it will no longer deal with unlicensed debt management providers.
Consumer organisations commonly describe these businesses as “debt vultures” because of the harm they cause. Debt vultures target people concerned about bills, home repossession or the confusing credit reporting system. They promise a quick fix ‘debt solution’ but the reality is that often these unqualified, unregulated firms charge exorbitant fees, fail to deliver on many of their promises and leave financially struggling families with even less money.
“Debt vultures exploit loopholes in the law to prey on the vulnerable and target those in desperate need,” says Gerard Brody CEO of the Consumer Action Law Centre.
“All banks should follow NAB’s lead and stop dealing with debt vultures if they care about their customers,” he says.
Holding debt management and credit repair firms to higher regulatory and ethical standards is a crucial part of the solution. Mr Brody urged the Federal Government to implement a regulatory framework for all debt management firms, including an obligation to act in the best interests of their clients.
Other key reforms needed include making membership of the Australian Financial Complaints Authority compulsory; licensing by regulators; banning unsolicited sales and prohibiting upfront fees for service.
“We often hear from Australian families wooed by these ‘debt vultures’ with promises of fixing their credit report, wrangling their debts, and taking away financial worries. And all too often, these promises are just pure fiction,” says Brody.
“With growing financial difficulty due to COVID-19, business will be booming for debt vultures. We urge the Federal Government to act urgently, to ensure people can access quality debt advice.”
Fiona Guthrie, CEO of Financial Counselling Australia said, “financial counsellors applaud NAB for taking this strong stand against debt management companies. Too often these companies prey on people in financial hardship and make their situation worse.”
“With the number of people struggling with debt already increasing due to COVID-19 the time to act on these debt vultures is now.
“People struggling with bills and debts will be much better off if they talk to a free and independent financial counsellor.”
People struggling with bills and debts are urged to contact the National Debt Helpline (NDH) by visiting ndh.org.au or calling 1800 007 007. The NDH is a not-for-profit service that helps people in Australia tackle their debt problems. NDH is not a lender and does not ‘sell’ anything or make money.
Media contact: Mark Pearce, Media and Communications Adviser | Consumer Action Law Centre | 0413 299 567 | firstname.lastname@example.org