For many years the debt management and
credit repair services industry has been
allowed to target vulnerable Australians,
who are looking for a way to deal with their
mounting debt.
Debt management firms, or debt repair
companies promise consumers and make
guarantees to get them a “debt free life” or
“fix their debt by:

  • Cleaning, repairing or removing
    away credit reports.
  • Creating and managing budgets.
  • Negotiating with creditors, debt
    collectors, lenders or companies.
  • Advising and arranging formal debt
    agreements under the Bankruptcy
    Act 1966.

However instead of delivering on these promises, they charge large upfront or structured fees for little,
to no results. It is important to also note that many consumers are unaware of the actual cost of the
company’s service versus the benefit that they will receive. It is largely believed that often the poor
advice given leaves the consumer in a much worse financial position after seeing them.
On 25 September 2020, the Treasurer announced that reforms to Australia’s consumer credit laws were
coming. We are not alone in saying that these reforms are way overdue!

Currently debt management firms are not required to
hold a licence under financial services or credit
licensing regimes that ASIC administers. Whilst some
firms are regulated by the personal insolvency
regulator, majority are seen to fall inside a grey area of
law and this is where the call for tighter compliance has

The proposed legislative reforms will look to protect
vulnerable Australians by requiring debt management
firms to hold an Australian Credit License when they
are paid to represent consumers on matters related to
credit activities.

The consultation process for the reforms ceased on 12 February 2021. The proposed reforms will also
look to strengthen ASIC’s ability to:

  • Supervise the practices of the debt management industry;
  • Stop misleading and deceptive advertising;
  • Prevent unfair contract terms; and
  • Call for further management around fees structures.

We believe that the stronger compliance measures will prevent vulnerable Australians from
being ripped off and we look forward to seeing the changes come into effect. To learn more
about the proposed legislation reforms visit: