NAB says it will no longer put up with unlicensed debt companies preying on vulnerable customers
One of Australia’s major banks says it will crack down on unlicensed debt management companies preying on vulnerable customers.
NAB said unlicensed debt management providers, commonly known as debt vultures, took advantage of vulnerable people by claiming to have solutions to their debt and credit issues only to charge higher fees and often provide no service.
NAB is the first major bank to place a ban on dealing with debt companies that do not hold an Australian Financial Services licence.
The Australian Securities and Investments Commission has previously expressed concern about the risks of consumers using such companies to try to get on top of their personal liabilities.
Debt management companies have been reported to charge customers up to $8000 in administration fees for their services.
NAB executive of personal banking Rachel Slade said the bank wanted to make sure at-risk customers were appropriately and professionally supported by either NAB or 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.
“As more Australians seek help, it is important that we no longer deal with unlicensed, fee-charging debt management providers.”
According to NAB, 20,000 of its customers have sought financial hardship assistance, with 9 per cent engaging with external unlicensed debt management services.
The onset of the coronavirus pandemic has already caused 150,000 NAB customers to seek financial assistance with the bank.
“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,” Ms Slade said.
“We’ll then work with the customer’s appropriately accredited debt advocate to give them time to get things back on track.”
The Consumer Action Law Centre has welcomed NAB’s decision to cease dealing with debt vultures, with the promise of a quick fix debt usually coming from someone not qualified to give financial advice.
“Debt vultures exploit loopholes in the law to prey on the vulnerable and target those in desperate need,” Consumer Action Law Centre chief executive Gerard Brody said.
“All banks should follow NAB’s lead and stop dealing with debt vultures if they care about their customers.”