Minister Welcomes Responsible Debt Collection Code

The Financial Services Federation (FSF) has launched the Responsible Debt Collection Code, formalising its members’ commitment to ethical standards of debt collection practices that go beyond what is required of them by law.

The FSF is the industry body representing responsible non-bank finance providers operating in Aotearoa New Zealand. The FSF currently has over 90 members which also include 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,” says Executive Director Lyn McMorran.

“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.”

The release of the FSF’s Responsible Debt Collection Code has been welcomed by Commerce and Consumer Affairs Minister Duncan Webb.

“Codes like this 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. It is good to see the industry take steps to improve debt collection practices, and to set the standard for proper commercial practice,” the Minister says.

“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.”

FSF members agree with the consumer advocacy and financial mentoring sector that unsafe practices being used against mentors’ clients when consumer debt was being collected are unacceptable and not the way in which FSF members behave in their dealings with debtors. This led to members developing the Code to spell out the minimum standard of responsible behaviour expected from FSF members in their debt collection activities.

Through the Responsible Debt Collection Code, FSF’s members agree to limit the contact they have with the debtor to certain hours of the day, including not making face to face contact on Sundays (unless by prior arrangement with the debtor) and only where there is a genuine purpose for them to make such contact.

FSF’s debt collection members will, if the debtor prefers, work with a financial mentor or an authorised representative appointed by the debtor (with an appropriate privacy waiver in place). The Code also outlines where debtors can go to make a complaint about the debt collector’s activity in need.

The Code will be made available publicly on FSF members’ websites and will be distributed through the financial mentor networks of FinCap, the national umbrella organisation for financial mentors in New Zealand.

The Code was launched at a ceremony in Wellington on 10 Tuesday 2023, attended by members of the Federation, as well as several political Party candidates and representatives from financial dispute resolution schemes and other financial services sector associations.

View the Responsible Debt Collection Code here: https://acrobat.adobe.com/id/urn:aaid:sc:AP:c17cc67d-6330-4f9f-b4e7-15fc2749baa8

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