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Issue 23 - October 2015

Key Determinations


Debt Collection

The Applicant experienced difficulty in meeting her repayments toward her two credit card facilities for some time. We considered whether the FSP met its financial difficulty obligations to the Applicant, and whether it had complied with the industry standard set by the Debt collection guide for collectors and creditors (the Guideline).

We were satisfied that, based on the documents, the FSP had met its financial difficulty obligations.

However, we concluded that the FSP did not meet its Guideline obligations. We also concluded that the FSP continued to collect a debt which is the subject of a FOS dispute.

The Guideline sets industry standards for debt collection activity. The Guideline says that debtors are entitled to be free from excessive communications from collectors. Attempted contacts can also be considered harassing, where a debtor recognises the attempted contact is from a creditor collecting the debt. The Guideline also says that a creditor should not contact a debtor by a particular medium if the debtor has asked for the creditor to no longer contact them by that method.

We concluded that attempts to call the Applicant after she told the FSP “she is extremely upset with these constant calls” were a breach of the Guideline. This is because the Applicant specifically informed the FSP that she did not want to be contacted by telephone.

FOS considered that this was a reasonable request and, in view of the seriousness of its repeated attempts to contact the Applicant over a three year period after her specific request to stop, we awarded $3,000 in non-financial loss compensation to reduce her first credit card and $500 to reduce of her second credit card (where the contacts were less frequent).

Under our Terms of Reference, an FSP must not continue to collect a debt which is the subject of a FOS dispute. The FSP’s attempted contacts was a breach of both the Guideline and our Terms of Reference, and we considered it a particularly serious breach. This was particularly because the crux of the Applicant’s dispute was about the FSP’s repeat attempts to contact her to collect a debt.

Where there is repeated conduct by an FSP (for example, repeated instances of debt collection activity while the FOS file is open), each event may cause the Applicant additional non-financial loss, and so the amount of compensation for each claim may increase. The $3,000 compensation cap for non-financial loss claims applies to each claim, so FOS can award an Applicant more than $3,000 in total in a dispute if they have several claims.

The FSP made 27 contacts or attempted contacts for collection purposes after the Applicant’s FOS dispute was lodged. We considered each contact or attempted contact as a separate claim for non-financial loss. For the first claim, we awarded $200 compensation; however, the second claim was more serious because of the cumulative effect on the Applicant of the FSP’s repeated behavior, so the award of compensation was $250. Each award for each claim was increased by $50 on the last claim. This resulted in a total award of compensation for the non-financial loss the Applicant suffered as a result of the FSP’s repeated conduct of $22,950.