Darwin politician Jeff Collins challenged Lion Finance in court after they tried to make him bankrupt. (ABC News: Brendan Esposito)
Australia’s banks say they are making major changes to the way debt can be sold to debt collection agencies, after “very disturbing” reports of poor practices in the industry.
- Under the new guidelines, banks will no longer sell debts if a customer has an ongoing vulnerability
- Debt collectors will have to consult the bank that sold them the debt before bankruptcy is initiated
- The ABA has called on the Government to raise the forced bankruptcy threshold, which is currently $5,000
Debt collectors can legally sue to recover debts as little as $5,000, but consumer advocates were alarmed the tactic meant people were being dragged through the courts and risked losing their homes over small debts.
Now the Australian Banking Association (ABA) has launched a “major step up in safeguards”, which it said would protect vulnerable customers.
ABA CEO Anna Bligh said the changes…