Minister welcomes launch of new standard
The Financial Services Federation has formalised its members’ commitment to ethical standards for debt collection practices with the launch of the Responsible Debt Collection Code – a move welcomed by Duncan Webb, Commerce and Consumer Affairs minister.
FSF is the industry body representing more than 90 responsible non-bank finance providers operating in New Zealand and affiliate members providing services to the sector.
“The Responsible Debt Collection Code has been proudly developed by our affiliate and full members that carry out debt collection activities, to spell out how they commit to treating consumer debtors (borrowers) in a responsible manner,” said Lyn McMorran (pictured above), FSF executive director, in a media release.
“The members have agreed to abide by the code and understand that if they fail to do so, this could result in the FSF taking disciplinary action against them including having their membership of the FSF revoked.”
Webb said codes such as FSF’s Responsible Debt Collection Code are a useful addition and supplement the law.
“People collecting on loan defaults are already prohibited from acting in ways which are oppressive, harsh, or unconscionable, and must comply with reasonable standards of commercial practice,” the minister said. “It is good to see the industry take steps to improve debt collection practices, and to set the standard for proper commercial practice.
“Preventing unconscionable and misleading practices by debt collectors is important, especially as many debtors will be in vulnerable circumstances, or suffering real hardship. The move to closer cooperation between FSF members and financial mentors, as envisaged in the code, is a good initiative to further protect consumers from predatory debt collection practices.”
The Responsible Debt Collection Code was developed to spell out the minimum standard of responsible behaviour expected from FSF members in their debt-collection activities.
For one, the code limits the contact FSF members have with the debtor to certain hours of the day. This includes not making face-to-face contact on Sundays, unless they had a prior arrangement with the debtor, and only where there is a genuine purpose for them to make such contact.
The code also sets out that if the debtor prefers, FSF’s debt collection members will work with a financial mentor or an authorised representative appointed by the debtor (with an appropriate privacy waiver in place). The code also outlined where debtors can lodge their complaints about the debt collector’s activity.
The Responsible Debt Collection Code will be made available on FSF members’ websites and will be distributed through the financial mentor networks of FinCap.
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