Recommendation
20 May 2016
• Validity of assignment
• Validity of default listing
• Debt collection and harassment
Credit and Investments Ombudsman Limited ABN 59 104 961 882
Credit and Investments Ombudsman Ltd
ABN 59 104 961 882
Case Management
PO Box A252
Sydney South NSW 1235
20 May 2016
T 02 9273 8400
F 02 9273 8440
[email protected]
www.cio.org.au
Recommendation of reasonable offer
1.
This Recommendation provides the parties with our assessment of the
consumer’s complaint.
Summary
2.
This complaint relates to three FSP accounts: 1, 2 and 3 (the three
accounts).
3.
To resolve the complaint, on 11 March 2016, the FSP offered to:
4.
(a)
reduce the outstanding balance of the three accounts from $2,984.09 to
$1,500,
(b)
allow the consumer to nominate a monthly payment arrangement for the
$1,500 balance, and
(c)
remove all adverse listings relating to the three accounts.
On the information we have available, we find that the offer that the FSP has
made represents a reasonable offer under our Rules. We recommend that the
consumer accept the offer in settlement of the complaint.1
Background to complaint
Account 1
5.
On 29 December 2007, the consumer entered into a rental agreement with the
FSP for a washing machine and dryer.
6.
Under the contract, the consumer was required to pay $43.05 on the 30th of
each month for 60 months.
7.
The account fell into arrears when the consumer did not make the 30 June
2010 payment.
8.
On 10 January 2011, the FSP issued a Notice of Demand to the consumer. The
account was $247.20 in arrears.
9.
By 7 February 2011, the consumer had not paid the overdue amount. The FSP
issued a Notice of Termination to the consumer and informed him that it would
list a payment default on his personal credit file.
1
CIO Rule 20 – 9th Edition. All references to the CIO Rules in this letter are to the ninth edition of our
Rules.
10.
On 24 February 2011, the FSP listed a payment default of $1,271 on the
consumer’s credit file.
11.
The FSP then instructed an external agent, E Pty Ltd, to collect the outstanding
debt. The consumer made a number of debt repayments through E Pty Ltd.2
12.
Between July 2012 and November 2012, the account was assigned to C Pty
Ltd. It was then recoursed back to the FSP.3
13.
In 2013, it appears that this account was then assigned to P Pty Ltd.4
14.
On 27 September 2013, P Pty Ltd listed a payment default of $1,168 on the
consumer’s commercial credit file. This listing was removed from the file before
this complaint was lodged.
15.
On or around 3 December 2013, the account was recoursed back to the FSP.
16.
As of the date of this letter, the consumer had not repaid the debt.
Account 2
17.
On 14 September 2007, the consumer entered into a rental agreement with the
FSP for a refrigerator/freezer.
18.
Under the contract, the consumer was required to pay $43.05 on the 27th of
each month for 60 months.
19.
The account fell into arrears when the consumer did not make the 27 June
2010 payment.
20.
On 4 January 2011, the FSP issued a Notice of Demand to the consumer. At
that time the account was $179.15 in arrears.
21.
By 6 February 2011, the consumer had not paid the arrears. The FSP issued a
Notice of Termination to the consumer and informed him that it would list a
payment default on his personal credit file.
22.
On 24 February 2011, the FSP recorded a payment default of $1,089 on the
consumer’s credit file.
23.
The FSP then instructed an external agent, E Pty Ltd, to collect the outstanding
debt. The consumer made various debt repayments through E Pty Ltd.5
24.
From July 2012 to November 2012, the account was assigned to C Pty Ltd.
After November 2012 it was recoursed back to the FSP.6
25.
It appears that this account was also assigned to P Pty Ltd in 2013.7
2
The consumer has given us only seven BPAY receipts for payments he made to E Pty Ltd. He has given
us an email from E Pty Ltd dated 30 December 2014 in which the account balance of the three accounts is
shown as $3,064.09. The FSP has not given us an E Pty Ltd account statement.
3
Based on information contained in the consumer’s credit file and the FSP’s contemporaneous file notes.
4
Based on the information contained in the consumer’s commercial credit file and the FSP’s
contemporaneous file notes.
5
The consumer has given us only seven BPAY receipts for payments he made to E Pty Ltd. He has given
us an email from E Pty Ltd dated 30 December 2014 in which the account balance of the three accounts is
shown as $3,064.09. The FSP has not given us an E Pty Ltd account statement.
6
Based on information contained in the consumer’s credit file and the FSP’s contemporaneous file notes.
26.
On 27 September 2013, P Pty Ltd recorded a payment default of $1,030 on the
consumer’s commercial credit file. This listing was removed from the file before
this complaint was lodged.
27.
On or around 3 December 2013, the account was recoursed back to the FSP.
28.
On 21 April 2015, the consumer received a Notice of Assignment of Debt from
P Pty Ltd. The notice informed him that the debt had been assigned to it. It
appears that the account was again recoursed back to the FSP in 2015.8
29.
As of the date of this letter, the consumer had not repaid the debt.
Account 3
30.
On 30 September 2007, the consumer entered into a rental agreement with the
FSP for a television.
31.
Under the contract, the consumer was required to make an initial payment of
$108.36. He then had to pay $57.42 on the 27th of each month for 59 months.
32.
The account fell into arrears when the consumer did not make the 27 June
2010 payment.
33.
On 4 January 2011, the FSP issued a Notice of Demand to the consumer. At
that time the account was $189.84 in arrears.
34.
By 3 February 2011, the consumer had not paid the arrears. The FSP issued
the consumer with a Notice of Termination and informed him that it would list a
payment default on his personal credit file.
35.
On 9 April 2011, the FSP recorded a payment default of $1,444 on the
consumer’s credit file.
36.
The FSP then instructed an external agent, E Pty Ltd, to collect the outstanding
debt. The consumer made a number of debt repayments through E Pty Ltd.9
37.
As of the date of this letter, the consumer had not repaid the debt.
Consumer’s claims and preferred outcome
38.
As we understand it, the consumer is claiming that:
(a)
he maintained a payment arrangement with E Pty Ltd for several years
and does not know whether his payments were correctly applied to the
accounts, and
(b)
he has been harassed by the FSP’s collection of the debt, specifically
because:
7
Based on the information contained in the consumer’s commercial credit file and the FSP’s
contemporaneous file notes.
8
Based on an email from the FSP dated 25 January 2016.
9
The consumer has given us only seven BPAY receipts for payments he made to E Pty Ltd. He has given
us an email from E Pty Ltd dated 30 December 2014 in which the account balance of the three accounts is
shown as $3,064.09. The FSP has not given us an E Pty Ltd account statement.
39.
(i)
each account has been reassigned multiple times,
(ii)
the assignments occurred while he was maintaining his payment
arrangement with E Pty Ltd,
(iii)
the FSP continually contacted his previous employer even though
his previous employer told the FSP that he no longer worked there,
and
(iv)
P Pty Ltd incorrectly recorded two payment defaults on his
commercial credit file (although they were later removed).
In settlement of this complaint, the consumer would like the three outstanding
debts waived.
FSP’s response
40.
The FSP has been unable to explain the reassignment of the accounts.
41.
To resolve the complaint, on 11 March 2016 the FSP offered to: 10
(a)
reduce the outstanding balance of the three accounts from $2,984.09 to
$1,500,
(b)
allow the consumer to nominate a monthly payment arrangement for the
$1,500 balance, and
(c)
remove all adverse listings relating to the three accounts.
Considerations CIO is required to have regard to
42.
In dealing with this complaint, CIO has observed procedural fairness and has
had regard to:
(a)
relevant legal requirements and rights provided by law to consumers,
(b)
applicable codes of practice,
(c)
good industry practice in the financial services industry, and
(d)
fairness in all the circumstances.
43.
We gave the consumer and the FSP the opportunity to give us information to
support their claims.
44.
We are satisfied that, apart from any information considered to be confidential
and/or commercially sensitive, the FSP and the consumer have exchanged all
relevant information that they gave to the CIO.
How has the current balance of the three accounts been calculated?
45.
10
The consumer claims that he has maintained a payment arrangement with E
Pty Ltd. He does not know whether his payments have been correctly applied
to the three accounts.
The FSP’s email has been attached to this Recommendation.
46.
CIO has requested a copy of the E Pty Ltd account statements. However, the
FSP has informed CIO that it is unable to access this information.
47.
In an email to CIO dated 25 January 2016, the FSP advised: 11
No payments have been made towards any of the disputed defaults since the
accounts were written off. The balance of each account remains unchanged as per
below.
1 – $1270.59
2– $865.57
3 – $1444.49
48.
As we understand it, the FSP claims the accounts were “written off” on the
following dates:
(a)
account 1: 23 February 2011, with an outstanding balance of
$1,270.59,
(b)
account 2: 23 February 2011, with an outstanding balance of
$1,089.01, and
(c)
account 3: 8 April 2011, with an outstanding balance of $1,444.49.
49.
The consumer has given us several emails between himself and E Pty Ltd that
show the balance of the three accounts. The consumer has also given us seven
BPAY receipts which confirm some repayments he made to E Pty Ltd.
Therefore, it appears that the information the FSP has given us conflicts with
that provided by the consumer.
50.
On 18 January 2016, 29 January 2016, 2 March 2016 and 10 March 2016, we
asked the consumer to give us proof of all of his payments to E Pty Ltd. To
date, the consumer has not provided this.
51.
Taking into account the information we have received and the gaps in each
party’s version of events, CIO has calculated the combined balance of the three
accounts to be $2,984.09.12
Was the consumer subject to harassment because of the debt collection
activity that occurred?
52.
11
As we have noted above, the consumer states that he has been a victim of
harassment because the cumulative impact of the following factors has caused
him significant stress and worry:
(a)
each account has been reassigned multiple times,
(b)
the assignments were made while he was maintaining his payment
arrangement with E Pty Ltd,
Quoted verbatim. All quotes reproduced in this letter have been quoted verbatim.
This figure has been calculated from the balance quoted by E Pty Ltd in an email to the consumer dated
30 December 2014 (email attached), less any payments subsequently made by the consumer for which
receipts have been provided (BPAY receipts attached). The amount is therefore $3,064.09 – $40 (payment
made on 16 February 2015) – $20 (payment made on 16 March 2015) – $20 (payment made on 16 April
2015).
12
(c)
the FSP continually contacted his previous employer even though that
employer told the FSP that he no longer worked there, and
(d)
P Pty Ltd incorrectly recorded two payment defaults on his commercial
credit file (although they were later removed).
Assignment of the debts
53.
Section 12 of the Conveyancing Act 1919 (NSW) (Conveyancing Act) states
that the legal owner of the debt has the right to assign the debt.
54.
In this complaint, the FSP was the legal owner of the debt and they held the
right to assign the debt.
55.
We consider that the sale of debts is a lawful and commercial decision. A debt
may be sold regardless of whether an account is in arrears or a consumer has a
payment arrangement. Also, we consider that, as the legal owner of the debt,
the FSP was entitled to assign the accounts even if the consumer was making
payments to E Pty Ltd.13
56.
However, we do not have enough information to conclude that all of the
assignments were valid.
57.
Generally speaking, for an assignment to be legally valid:
(a)
the assignment must be absolute,
(b)
the assignment must be stated in writing by the assignor, and
(c)
there must be express written notice to the debtor. Theoretically, this can
be given by either the assignee or assignor.14
58.
We have been given only one written notice. It appears to have been sent by P
Pty Ltd to the consumer on 21 April 2015.
59.
As to the other debts, on numerous occasions we have asked the FSP for
documentation to confirm the other assignments, but we have not received
any.
60.
The FSP has not given us complete and reliable copies of the notices that were
sent in relation to each of the assignments. As a result, we cannot conclude
that:
13
14
(a)
the FSP notified the consumer of the assignments (and this raises the
question of whether the assignments were legally valid),
(b)
the FSP, P Pty Ltd and C Pty Ltd complied with their privacy obligations.
In other words, if there is no information to demonstrate that a valid
assignment occurred (partly because the FSP has not given us proof that
it gave the notices to the consumer) then the FSP may not have been
legally permitted to pass the consumer’s personal information on to C Pty
Ltd and P Pty Ltd, and
CIO Rule 36.1(d) and 10.1(f).
Conveyancing Act 1919 (NSW), s 12.
(c)
C Pty Ltd or P Pty Ltd’s communication with the consumer in relation to
the debt was lawful.
Contact with third parties
61.
Under ASIC Regulatory Guide 96,15 the FSP was entitled to contact third parties
in order to locate the consumer. However, the guide recommends that the FSP
limit this contact to no more than once every six months.
62.
The FSP file notes for the three accounts show that the consumer sent the FSP
an email on 4 October 2013. In the email he complained about the FSP
contacting third parties:
... The other thing that keeps happening is you are contacting old employers, family
members ect.
63.
The only record of the FSP making contact with a third party is a telephone call
to the consumer’s former workplace on 8 February 2011:
work# s/w male NLWT left months ago no other details.
64.
We consider it reasonable to assume that the consumer’s email dated 4
October 2013 did not relate to the 8 February 2011 call. It possibly relates to
calls made by P Pty Ltd, which, based on the available information, appears to
have been the assignee at that time.
65.
As mentioned above, the FSP has not given us any information or
documentation on the assignment of the debts and the collection conduct of
any possible assignees. Therefore, on balance and as a matter of fairness, we
find that the FSP breached the ASIC Regulatory Guide during its collection
process.
Duplicate default listing
66.
A credit provider is not permitted to relist default information with the same
credit reporting agency after the maximum retention period has expired. 16
67.
Section 2.5 of the Code also states that where a credit provider becomes aware
that:
(a)
it has given a credit reporting agency personal information that was
inaccurate and that might adversely affect the decision to grant credit, or
(b)
it has given information of a type that a credit reporting agency cannot
include in an individual’s credit information file,
the credit provider must immediately advise the credit reporting agency of the
inaccuracy or existence of prohibited information.
68.
The consumer has given us three credit files:
(a)
a credit file with V Pty Ltd dated 30 December 2014,
15
ASIC Regulatory Guide 96: Debt collection guideline: for collectors and creditors. The October 2005
version applied to all contact up until July 2014.
16
Section 55A of the Explanatory Notes to the Credit Reporting Code of Conduct (the Code).
(b)
a credit file dated with D Pty Ltd 18 February 2015, and
(c)
a credit file with V Pty Ltd dated 6 March 2015.
69.
The consumer’s credit file dated 30 December 2014 shows two duplicate
default listings in the consumer’s commercial credit information. The listings
relate to accounts 531117 and 556489.
70.
The consumer’s credit file dated 18 February 2015 and Veda credit file dated 6
March 2015 do not record any commercial credit information.
71.
The consumer also told us that he raised his complaint with the relevant credit
reporting bureau and the listings were removed.
72.
Therefore, it appears that the appropriate action was taken to remove the
duplicate listings within a reasonable period of time. As this aspect appears to
be resolved, we will not deal with it further.
Recommendation of reasonable offer
73.
We can recommend that the consumer accept an offer if, in the circumstances,
we consider that it is reasonable.17
74.
As we have stated in our Review, we are unable to conclude that:
75.
76.
17
18
(a)
the assignments were valid,
(b)
the FSP notified the consumer of the assignments (and this raises the
question of whether the assignments were legally valid), and
(c)
the FSP, P Pty Ltd and C Pty Ltd complied with their privacy obligations
when contacting the consumer and third parties.
To resolve the complaint, on 11 March 2016 the FSP offered to:
(a)
reduce the outstanding balance of the three accounts from $2,984.09 to
$1,500,
(b)
allow the consumer to nominate a monthly payment arrangement for the
$1,500 balance, and
(c)
remove all adverse listings relating to the three accounts.
In view of the available information, we consider that the FSP’s offer is
reasonable because:
(a)
all adverse listings relating to the three accounts will be removed,
(b)
based on the outstanding balance calculated in paragraph 51 of this
letter, the FSP’s offer represents a $1,484.09 discount, 18
(c)
although, based on the information we have, C Pty Ltd and P Pty Ltd did
not make an unreasonable level of contact, given that we do not have
CIO Rule 20.1.
$2,984.09 – $1,500 = $1,484.09.
information on the assignment of the debts we consider that some form
of compensation is necessary to remedy any potential privacy breaches
that occurred. Weighing these factors, we consider that this amount fairly
compensates the consumer for any stress and inconvenience he suffered
as a result of being contacted by C Pty Ltd and P Pty Ltd,19 and
(d)
77.
19
the FSP has agreed to enter into a payment arrangement that is suitable
to the consumer.
Therefore, to settle this complaint, we recommend that the consumer accept
the FSP’s offer.20
In the case where there is an outstanding debt, any compensation awarded to the consumer will be
credited to the FSP towards the outstanding debt balance.
20
CIO Rule 20.1.