ASIC takes mercantile agency ACM to court

The Australian Securities and Investments Commission has commenced proceedings in the Federal Court against Accounts Control Management Services Pty Ltd and ACM Group Ltd, one of Australia's largest debt collection companies.

ASIC said in a statement yesterday that it alleges ACM contravened the ASIC Act or the Trade Practices Act by engaging in misleading or deceptive conduct and undue harassment or coercion while carrying out a debt-collection business.

ASIC said it was seeking declarations in relation to collection activity involving eight debtors between November 2008 and June 2010. It is also seeking orders restraining officers and employees of ACM from engaging in this conduct in future.

ACM purchases debt ledgers, including credit card, personal loan and telecommunications accounts.

Accounts for ACM Group show the firm reported a net profit of A$15.5 million on turnover of $64 million in the year to June 2010.

Profit metrics for the firm are more attractive than for listed counterparts, with a return on equity of 60 per cent and a return on assets of 25 per cent.

ACM purchased $24 million in debt (with an unknown face value) in 2010 and $33 million of debt in 2009. It wrote off $20 million in the value of previously purchased debt in each of 2009 and 2010.

Major shareholders and staff at ACM include the CEO, Humberto Vieira and his family.