ASIC warns consumers about paying high fees for credit repair and debt advice services
ASIC is warning consumers about companies that claim they can fix a poor credit rating.
ASIC is running a campaign, with other Commonwealth, state and territory agencies, to help consumers understand that by using credit repair and debt management firms they may end up paying high fees.
Consumers should be aware these companies often fail to fix credit and debt issues, which can leave people in a worse financial situation.
ASIC Deputy Chair, Peter Kell said consumers may not realise that free services exist to help them fix credit reports or resolve their debt problems, such as the National Debt Helpline.
“Consumers experiencing money or debt problems don’t need to put themselves under further financial stress by paying high fees to firms providing credit repair and debt solution services,” Mr Kell said.
“If people are having difficulty obtaining loans because of an incorrect default listing on their credit report, there are actions they can take that are free of charge to have it corrected.
“If you think you have had a credit default wrongly listed against you, contact the creditor and ask
for it to be removed.
“If you aren’t satisfied with the response you receive, you can contact the relevant dispute resolution service for help,” added Mr Kell.
People experiencing debt problems can seek free help and guidance from financial counsellors and the National Debt Helpline on 1800 007 007 or go to ndh.org.au.
In 2016, an ASIC report found debt management firms: were offering services where fees and costs were not well explained; Often required payments be made before services were provided;
sometimes used high-presure sales techniques. Mr Kell suggested consumers can consider alternative services like financial counselling before engaging a debt solutions firm.
Consumers should be aware that lenders will review their credit report when they apply for credit or a loan and they should check their credit history details are correct.
Consumers are entitled to obtain one free copy of their credit report each year from a credit reporting agency.
For more information visit ASIC’s MoneySmartwebsite at www.moneysmart.gov.au.