Plea to MPs to stamp out harassment, coercion by debt collectors
Wednesday, 22 July 2026
As the cost of living pushes debt levels higher, many people who are least able to pay are subject to unacceptable levels of coercion and harassment from debt collectors, MPs heard this morning.
Because of this, the Government should use its Fair Trading Amendment Bill to license and regulate debt collectors, they were told. The bill is designed to update fair trading laws, including lifting fines for unfair trading, which have not been increased for many year, though judges have been award higher penalties under existing laws.
Jake Lilley, senior policy adviser from Fincap, the umbrella group for over 700 financial mentors, appeared before the Finance and Expenditure Select Committee today to make the plea for more attention to debt collector behaviour.
Some examples included debt collectors visiting a debtee’s house and refusing to leave until part of a payment is made; constant, harassing phone calls and messaging; and yelling abuse at financial mentors who try and sort the issue out.
Read more:
‘I’d be willing to do time’: What people deep in the red really think of debt and debt collectors
Government to introduce ‘safe harbour’ law for scam takedowns
Lilley told MPs he got “calls and emails from financial mentors saying ‘I just can’t believe this unacceptable thing from a debt collector continues to happen, and I can’t really find a way through it’.”
Fincap’s most recent survey found 60% of mentors encounter clients experiencing issues with debt collectors “very often” and 34% “sometimes”; 86% had demand such that they went without food and other essentials to make repayments, and two thirds had seen “excessively frequent contact from debt collectors, which is not constructive, really, when you look at someone being unable to pay”, said Lilley.
“We do think that debt collection is a legitimate part of our economy but the rules around it need tidying up to stop needlessly harmful contact that doesn’t benefit anyone.”
With the cost of living still high, there would be a long tail of people taking on unmanageable debt, and that meant the issues needed to be tidied up right now, before still more people experience coercion and abuse, he said. The harassment had highly detrimental effects, from people refusing to answer their phones, to strained relationships, more hospitalisations and even suicidal ideation.
Fincap is calling for debt collectors to be licensed to ensure regulators can monitor them, and hold them to account for breaching laws, or commitments they have made, when trying to collect debts.
It also called for a moratorium on attachment orders to benefits, which, as The Post has reported, are undermining the benefits system by diverting up to 40% of recipients’ benefits to repay finance companies, landing them in financial hardship.
He said there should be a review of attachment orders starting with a forum of government, court and community organisations that are left having to resolve the hardship that the use of attachment orders by private lenders caused.
In Fincap’s written submission, it said: “Harassment and coercion are prohibited in the Fair Trading Act, but the Commerce Commission currently does not have the tools and resources to respond to issues in a timely way to strongly deter this conduct.
“This leads to significant consumer harm from repeated interactions where alleged debtors are frightened and can end up paying sums they cannot afford without experiencing substantial hardship.”
While Fincap did not name debt collectors, it said in its submission: “Most debt collectors FinCap is aware are operating on a large scale, are operating in both Australia and here.”
But, mentors believe, their behaviour here was more aggressive because Australian laws have curtailed practices across the Tasman.
“Based on what financial mentors have told us, the larger debt collection agencies can have the same contact centres for onshore debts and those they contact in Australia. We have compared the protections in practice with the Australian equivalent of our sector, and concluded that the consumer protections there are workable and an improvement on our status quo,” Fincap said.
Fincap called for debt collection rules in New Zealand to be harmonised with those in Australia to give New Zealanders in debt the same protections as Australian debtors have.
It also called for clear guidance from regulators on what debt collection practises were acceptable.