Laws that apply to debt collectors

• Fair Trading Act 2010

  This Act is based on the Trade Practices Act 1974 (Commonwealth) and mirrors its misconduct prohibitions.

• Unauthorised Documents Act 1961

  This Act bans the design of collection letters of demand so that they resemble court documents.

• Limitation Act 2005

  This Act concerns limitation periods on debt recovery actions. It prevents a creditor from recovering payment for a debt if the limitation period has expired. The limitation period is generally six years.

• National Consumer Credit Protection Act 2009 incorporating the National Credit Code (the principal vehicle that regulates consumer credit transactions in Australia)

  This Code contains provisions for debtors' access to account information and documents; varying repayment schedules on the grounds of temporary hardship; and enforcement of credit contracts, mortgages and guarantees.

The following Commonwealth Acts also apply to the debt collection industry in Western Australia:

• Privacy Act 1988 (administered by the Office of the Privacy Commissioner)

  Part IIIA of this Act regulates the collection, use and disclosure of personal information. It requires businesses to keep accurate, complete and up-to-date records and to give debtors access to the information held about them on request.

• Bankruptcy Act 1966 (administered by the Insolvency and Trustee Service Australia)

  Under this Act, 'provable' debts of a bankrupt debtor are dismissed. Most unsecured debts are classed as provable. To settle provable debts, a collector must follow the scheme of administration under the Act.

Limits on debt collectors' compensation

• A debt collector is not entitled to retain any commission, fees, charges, reward or other remuneration unless their engagement or appointment is in writing and signed by the client (the creditor). Section 13(1)(b) of the Debt Collectors Licensing Act 1964.
• A debt collector is not entitled to retain any commission, fees, charges, reward or other remuneration unless there is an agreement between the licensee and the client in respect of the commission, fees, charges, reward or other remuneration to be charged. Section 13(1)(c) of the Act.
• A licensee's costs are generally not recoverable from a debtor unless there is a contractual agreement between the creditor and the debtor evidencing that the debtor is liable for debt collection and/or recovery costs. Where the contractual agreement provides for such costs to be recovered, they are payable to the creditor who pays the debt collector pursuant to the agreement made with the licensee under section 13(1)(c) of the Act. Such costs must be reasonable and can be disputed by a debtor before the Courts.
• Where a debt is paid by instalments, a debt collector may recover from the debtor a sum of 50 cents or a sum not exceeding 2.5 per cent of the amount of the debt, whichever is the greater amount. (Regulation 13 of the Debt Collectors Licensing Regulations 1964)