Monday 19 Dec 2016
By: Kai Zauner-De Ville
In my work, I have started to see the impact that paid financial services has on my clients. These businesses are preying on people when they are stressed, vulnerable and confused. They are claiming to provide services which will alleviate people’s troubles, and whilst this may be the case for some, the damage they can and do is very serious.
There are a number of different types of companies that fall under the term “debt vultures”, from debt relief and credit repair to budget management. What all these companies have in common is that they prey upon people who are in vulnerable situations, making them pay for financial services that people may be able to access for free. High or unclear fee structures are also common.
I was contacted by a client who was told they would have to pay $1500 up front to a debt vulture company in order to be made bankrupt. There was no mention that going bankrupt is a free process, nor were they told that there were other people, such as financial counsellors, who could help them for free. It was only through luck that they found me and I was able to help them. The worst part of this process is that this client, and others, still expected me to charge them but simply hoped that we would charge them less.
The companies promise freedom from money problems but often put their own interest in making a profit above what is in the client’s interest. In one case where this was obvious, the client had been using a budgeting service for his daily finances for a year. The reason he came to see me was that his mother received a letter saying that the bank was moving towards repossession of her house, which was a security for one of his debts. When he called the budgeting service to ask what was going on he was told that the debt had not been paid because his income was insufficient.
“My client went from making his repayments to almost losing his mother’s house because of the irresponsible practice of the company.”
Before he was with the budget business he had been able to pay everything, he just found the stress of juggling everything too much and wanted someone to take it off his hands. Instead he got a business which did not talk to him and had the mail redirected to them so he never saw any letters or bills and almost lost his mother’s house. And worse, there was no recourse against the budget service for its poor service and irresponsible practices except through contract law and the court system.
I find it gruelling to hear these stories and know that these debt vulture companies are making matters worse for people who are looking for a solution to their financial problems. The debt vultures need to be regulated and held up to minimum standards on qualifications of workers and conduct.
REMEMBER: Financial Counsellors – we give a damn!
Kai Zauner-De Ville is a financial counsellor at Lifeline Melbourne - Wesley Mission Victoria.
The Consumer Action Law Centre is campaigning for regulation of Debt Vultures. We would love to hear about the clients you have helped after they dealt with a debt vulture company.
If you have any case studies, either of people who have been involved with these businesses or where people have avoided them please send them through to Lifeline Financial Counsellor Kai Zauner-De Ville firstname.lastname@example.org.
For more information on how to get involved please contact policy officer Cat Newton at Consumer Action on email@example.com or 03 9670 5088.