Debt industry seeks answers on fees
Debt industry representatives will meet with officials from the federal government's Insolvency & Trustee Service Australia service in Brisbane tomorrow and are expected to ask for clarification of new fees for Part IX Debt Agreements which have been announced for introduction on 1 October. The caretaker government has not been able to confirm the proposed $200 up-front fee and a rise in the trailing commission to ITSA. The move was a budgetary one tacked on to bankruptcy act reforms and is not welcomed by the industry, which may be reluctant to help ITSA collect it.The industry is already under pressure, and not just from economic stimulus payments and low interest rates. There are just thirty-six registered debt agreement administrators left in Australia, down from more than one hundred five years ago. The market leader, Fox Symes, reports that they haven't made a cent from debt agreements since up-front fees were banned over three years ago."The new fee will be problematic," said Deborah Southon, Director of Fox Symes."I wouldn't be surprised if it meets a lot of consumer resistance. What is ITSA going to do if a debtor refuses to pay the fee or can't pay the fee? These people can't pay their bills now."The new government fee slug comes on top of the already expensive debt agreement administrator fees (a Fox Symes' debt agreement typically costs about $100 per month in fees for almost five and a half years).