Financial watchdog launches crackdown on dodgy debt managers

One of Australia’s financial watchdogs is cracking down on dodgy debt managers following a string of incidents targeting vulnerable customers, including one woman who was told to declare bankruptcy for no reason.

The Australian Securities and Investments Commission (ASIC) announced today it is launching a review of the debt management and credit repair sector to better protect consumers experiencing financial hardships.

It said it had received a number of “disturbing” stories of illegal and unfair practices from licensed professionals.

“In one instance, we heard that a woman could not get an answer on why her debt management firm was not making any payments to her creditors,” ASIC Commissioner Alan Kirkland said.

“After numerous calls to the firm, she was told to enter into bankruptcy with no further explanation.

“Another man was at risk of having his car repossessed after his debt management firm failed to respond to default notices from creditors.

“When he cancelled his contract and asked for a partial refund from the debt management firm, they said there was a no-refund policy.”

ASIC’s investigation will review how well debt managers are following the law, following the introduction of a licensing scheme in 2021.

It will publish its findings next year.