29 Jul 2020

NAB cracks down on unlicensed debt management companies

In a first for Australian banks, NAB will no longer deal with unlicensed, fee-charging debt management providers, an important step as more Australians seek help as a result of the COVID-19 crisis.

ASIC has previously warned consumers about the risks of using unlicensed debt management providers who charge high fees but often fail to help customers fix their credit and debt issues[1].

In 2019, almost 20,000 NAB customers sought financial hardship assistance, with an additional ~9% engaging debt management providers that charged fees and often operated without any professional credentials. In 2020, the number of customers seeking assistance has surpassed 150,000, with NAB continuing to provide a range of support measures for customers impacted by COVID-19.

NAB Group Executive, Personal Banking, Rachel Slade said NAB wanted to ensure financially vulnerable customers were appropriately and professionally supported, either directly by NAB or by an accredited representative of their choice.

“Now more than ever, customers are facing situations that can leave them in a vulnerable financial position,” Ms Slade said. “Our NAB Assist team is hearing stories every day that are very difficult – accounts of people whose lives have been shaken by COVID-19.

“We continue to check in with our customers who have requested payment deferrals due to the impact of COVID-19 and know many still need our support through this crisis.

“However, we also understand that some customers won’t be able to bounce straight back. As more Australians seek help it is important that we no longer deal with unlicensed, fee-charging debt management providers.”

Ms Slade said this action would help protect customers from potentially being placed in a worse position financially and help give them confidence they are getting the best support possible.

“We will continue to work with customers who are unable to make repayments to find the right solution for them, or refer them to professional, free and independent services from organisations such as Way Forward Debt Solutions, the National Debt Helpline or not-for-profit financial counsellors based right across Australia,” Ms Slade said.

“We’ll then work with the customers’ appropriately accredited debt advocate to give them time to get things back on track. Our NAB Assist team can also help financially distressed customers with grants, low interest loans and even support with challenges such as finding a job.

“We have added more resources into our NAB Assist team so we can better help customers in hardship and work on the best outcome for them on an individual basis.”

Many for-profit providers do not hold a current Australian financial services (AFS) licence or Australian credit licence from ASIC, despite often appearing to provide services that require a license. A 2018 Senate Economics References Committee[2] recommended tighter regulation of all credit and debt management, repair and negotiation activities.

The move was initiated by NAB’s independent Customer Advocate Catherine Wolthuizen and has been supported by ASIC and welcomed by consumer groups including the Consumer Action Law Centre and Financial Counselling Australia.

These consumer groups are often engaged by customers following poor experiences with unlicensed operators.

NAB is committed to helping customers who experience financial hardship. Customers can speak to the specialised NAB Assist team on 1800 701 599 for support and guidance on free financial counselling services available. NAB also continues to provide a range of support measures for customers impacted by the COVID-19 crisis, which can be found at nab.com.au/coronavirus.

NAB’s Customer Support Toolkit and ‘Here to Help’ campaign also help customers with information on how they can proactively address their financial health based on their situation.

These measures build on additional actions NAB has taken to support customers with their financial wellbeing, including establishing a new Customer Support Hub and enabling the option to place a gambling block on accounts via the NAB mobile app.

“We hope that by providing tools and resources to customers before they get into trouble, there’s a greater chance they will be able to manage their financial health and get back on their feet quickly,” Ms Slade said.

Tips for consumers experiencing financial stress or hardship or with credit or debt problems:

  • Talk to your lender or bank about your circumstances and how these are impacting you. NAB customers can contact NAB Assist.
  • Talk to a free and independent financial counsellor or community legal service for help – such as Way Forward or The National Debt Helpline.
  • Seek assistance from the Consumer Action Law Centre or Financial Counselling Australia.
  • Visit ASIC’s MoneySmart website which has information and guidance for consumers about trouble with debt and credit repair.

[1] ASIC media release 4 June 2018 ‘ASIC warns consumers about paying high fees for credit repair and debt advice services’

[2] Senate Economics References Committee Inquiry into ‘Credit and financial services targeted at Australians at risk of financial hardship’.

 

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