The huge up-front fees and dubious value of services provided by for-profit debt businesses is in the spotlight after a new report by the Australian Securities and Investments Commission (ASIC).
Consumer Action Law Centre CEO Gerard Brody says the industry paints itself as the “friend” of struggling Australians, when in reality they often do more harm.
“These companies are opportunists who make their money from targeting struggling Aussies and charging them excessively high fees. Our message to Australians is that debt vultures are not your friends. If you’re worried about debt, free and independent financial counselling is always the best first step.” says Brody.
“Community Legal Centres and Financial Counsellors have been cleaning up the messes of debt vultures for years with regular complaints from our clients who were expecting financial help, but were instead taken advantage of. We’ve helped many clients get refunds when the service claimed simply has not been delivered. The ASIC report notes that in a shadow shop, free financial counselling services and other free dispute resolution services were rarely mentioned by salespeople. “
Brody says the companies must be better regulated:
“ASIC’s report makes it clear there are serious gaps that are letting debt vultures work in a regulatory void. We want to see these businesses properly licensed, a ban on upfront fees and charges, require them to have external dispute resolution, and oblige them to actually act in their client’s best interests. It’s ridiculous that they’ve escaped this basic level of oversight and scrutiny that other types of financial or credit services have been under for years”.