Consumer Action Law Centre (Consumer Action) have issued proceedings in the Federal Circuit Court of Australia on behalf of a Narre Warren family who were charged $12,000 in fees and had a caveat lodged over their home by J Daniels & Associates.
Steven and Martha allege that they were misled by J Daniels & Associates and/or their agents,
J Daniels & Associates are a type of so-called “debt management firm”, also known as debt vultures. There are no requirements on such firms to be licensed by the regulator, meet professional or ethical standards, act in their client’s best interest, or resolve complaints through the new Australian Financial Complaints Authority (AFCA).
Consumer Action CEO Gerard Brody said that this matter reveals the need for urgent reform of the unregulated debt management sector.
“Supreme Court home repossession proceedings shouldn’t be exploited by unscrupulous companies to scare families into high risk, high cost services that don’t help.”
Steven and Martha allege that in 2013, shortly after their lender commenced repossession proceedings in the Supreme Court of Victoria, Steven and Martha received personalised letters from Home Loan Help, one of the business names of AREG, warning that their lender was ‘one step away’ from obtaining a court judgment and taking their home.
Steven and Martha allege that J Daniels & Associates, who presented as solicitors, together with AREG, suggested that they sign a ‘buy more time’ agreement to refinance their home loan and stop the repossession, and to perform debt negotiation and credit repair services.
In a claim filed in the Federal Circuit Court against J Daniels & Associates and Nationwide Debt Collection, Steve and Martha allege multiples breaches of the law, including unconscionable conduct, misleading and deceptive conduct, failure to provide services with due care and skill and unlicensed credit activities.
The claim alleges that J Daniels & Associates:
- did not stop the repossession of their family home;
- did not perform any debt negotiation or credit repair services;
- failed to advise on their options to avoid repossession, and put them at risk of a default judgment in the Supreme Court repossession proceedings;
- only made a complaint to the Financial Ombudsman Service (FOS), which Steve and Martha could have done themselves, without representation and free of charge;
- did not respond to FOS’s communications, which led to the closure of the FOS complaint. This in turn led to the Sheriff attempting to evict the family from their home.
Steven and Martha allege that, despite this, in 2016 Nationwide Debt Collection Pty Ltd demanded over $12,000 for services J Daniels & Associates allegedly provided.
“When families facing repossession of their home reach out for help, that’s what they need: help. They don’t need a debt vulture looking to make a quick buck and then leaving them in an even worse position,” said Mr Brody.
“Debt vultures continue to exploit a known gap in our financial services laws. These so-called “debt management” firms do not have to meet even basic professional and ethical standards, act in your best interests, or resolve your complaint. We need a robust regulatory framework for all debt management firms urgently,” Brody said.
Steven and Martha are not available for comment. Consumer Action can provide comment on the “debt management” industry.
To read more about debt vultures, see: https://consumeraction.org.au/debtvultures/
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