Te Herenga Waka—Victoria University of Wellington’s Victoria Stace, a senior lecturer at the Faculty of Law, says New Zealand has a problem with harassment by debt collectors, and she believes guidelines such as those in operation in Australia are the answer.
A recent piece of research conducted by Ms Stace and Liz Gordon of Pūkeko Research Ltd has provided further evidence of the types of practices engaged in by debt collectors.
“Constant messaging of debtors was common as well as contacting debtors at their workplace. Door knocking using intimidation tactics was also reported. Lack of clarity around fees, and the use of attachment orders against benefits without full consideration of the affordability of such payments for the debtor, were also commonly reported problems,” says Ms Stace.
Their research involved interviews with financial mentors from all around New Zealand, asking them questions about what their clients had told them about their debt collection experiences.
“Here in New Zealand, debt collectors are not bound by licensing restrictions, nor are they part of any industry body. While there are laws that apply to certain types of debt, a recent review of consumer credit regulation undertaken by our Ministry of Business, Innovation and Employment (MBIE) revealed poor debt collection practices are being employed,” says Ms Stace, in an article published in the New Zealand Business Law Quarterly Review.
A Google search of debt collectors in New Zealand revealed around 80 companies registered here for this type of service. These range from well-known collection companies like Baycorp and Illion, to small local companies. “Concerningly, about a quarter of the companies I found didn’t have a website, and initial contact was by phone or postal mail,” she says.
Australia has guidelines that set out the regulators’ view of what is and isn’t acceptable conduct by debt collectors. Ms Stace believes guidelines modelled on these would help to protect those who are vulnerable to harassment here in New Zealand.
“In both Australia and New Zealand, debt collection services are provided by a range of different companies, who deal with the debt and make their commission in different ways. The Australian guidelines cover all types of debt collections—agencies, debt purchasers, and in-house debt collectors. The underlying laws here and in Australia are different, but there are adjustments that can be made to allow something like these guidelines to be adopted here,” says Ms Stace.
Such guidelines, says Ms Stace, would give certainty to debt collectors about what is acceptable conduct. “They could also assist the Commerce Commission in enforcing the law and inform dispute resolution schemes.”
Some debt collection companies operating in Australia also operate in New Zealand, and these companies made submissions to the MBIE review indicating that this type of guiding document would be accepted in New Zealand.
“As it is the most economically and socially vulnerable members of our population that debt collectors are often working with, we need the right guidelines in place to ensure their safety.”