-- In a bid to provide a major increase in the level of safeguards and ensure vulnerable customers are protected, the Australian Banking Association (ABA) has recently released new guidelines in order to control assigned debts purchased from Australian banks.
The recommendations include:
1. Banks being consulted before legal proceedings are initiated against a debtor; and
2. Banks being given a buy back option.
The ABA, along with the Consumer Action Law Centre, Financial Counselling Australia and the Financial Rights Legal Centre, have also recommended to the Attorney General that the threshold for issuing a Bankruptcy Notice be increased from it’s current $5,000.
However, according to Paul Hutchinson from Gartree Thomson Lawyers, based in Sydney Australia, “raising this threshold may allow exploitation of creditors by debtors, and should therefore be considered with due care.”
He also contends that, “the recommendations are inconsistent with section 12 of the Conveyancing Act 1919 (NSW), which states amongst other things, that the assignment is to be ‘absolute’, which it cannot be if there is control by the banks and a buyback clause.”
“This will leave any assignment of debt ineffectual and unenforceable, leading to banks not being able to assign their debts.”
In closing, Paul Hutchinson urges that more guidance and assistance needs to be given to assignees in order to reduce the small amount of misjudgements made when deciding to proceed with a Bankruptcy, and not an increase in the threshold amount.
Gartree Thomson Lawyers, founded in 2014 with offices in Sydney and Hong Kong, is a boutique law firm specialising in commercial disputes, debt recovery, personal and corporate insolvency, conveyancing and employment law.
More information about the firm can be found by visiting their website: https://www.gartreethomsonlawyers.com.au/
To discuss any matters relating to the above guidelines, call Gartree Thomson Lawyers on 02 9922 4111.
Release ID: 88937457