For many small and medium-sized enterprises (SMEs) in Australia, unpaid invoices create real challenges. Collecting overdue payments is part of running a business, but in the rush to recover money, some organisations cross legal lines without realising it. Mistakes occur when debt collection steps are not handled carefully, which can lead to serious financial and legal consequences. 

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have clear rules that debt collectors and creditors must follow. Their debt collection guidelines detail what can and cannot be done when chasing debts. Ignoring these rules can bring expensive fines and other legal consequences. 

Overview of Australia’s Debt Collection Regulatory Framework

The landscape of debt recovery in Australia is shaped by several laws designed to protect both creditors and debtors. Key legislations include: 

• The Australian Consumer Law bans misleading, aggressive, or unfair debt collection practices. 
• The ASIC Act 2001 covers financial services and credit issues. 
• The National Consumer Credit Protection Act 2009 regulates lenders and ensures fair methods for loans, credit cards, and similar products. 
• The Bankruptcy Act 1966 sets out rules for demands on insolvent individuals. 
• Commonwealth privacy laws restrict how a debtor’s personal information can be used or shared. 
• State and territory fair trading laws often add licensing rules and further conduct restrictions. 

These laws apply to all businesses that collect debts themselves or use third-party agencies. Debtors have protections too—they can dispute a debt, request hardship relief, limit contact, and complain to regulators if they are treated unfairly. 

What Debt Collectors Can and Can’t Do Under Australian Law

Understanding the boundaries is the first step toward compliant practices for debt collection in Australia. 

The ACCC and ASIC guidelines are clear: 

Permitted Actions

• Contacting debtors only at reasonable times: weekdays 7:30 AM to 9:00 PM, weekends 9:00 AM to 9:00 PM, and no contact on national holidays.
• Verifying debts before reaching out, checking contracts, invoices, and payment records to ensure accuracy.
• Sending clear written notices with debt details and options to dispute. 

Prohibited Actions

• Harassment, threats, or pressuring debtors to make a decision on the spot. 
• Publicly shaming debtors or contacting their workplace without permission.
• Making false claims about legal action, such as court orders or wage garnishment.
• Calling too often or showing up unannounced.
• Using unlicensed debt collectors. 

Legal and Financial Penalties for Non-Compliant Debt Collection Practices

Non-compliant debt collection behaviour carries real costs. 

Under the ACL, fines for misleading or aggressive conduct can reach into the hundreds of thousands of dollars for individuals and up to millions for corporations. In some cases, each breach can be treated separately, multiplying the total. 

Beyond fines, breaches of consumer protection laws and debt collection standards may lead to other legal and remedial consequences, including: 

• Imprisonment. Individuals involved in serious breaches of the ASIC Act, such as dishonest conduct, can face criminal charges and prison sentences. 
• Damages and Compensation. If debt tactics cause financial loss or emotional distress, debtors can sue for damages to compensate for those harms. 
• Regulatory Penalties. The ACCC or ASIC can issue infringement notices, force businesses to change their operations, or obtain court orders banning individuals from managing or working in companies. 
• Reputational Damage. Regulatory action is almost always public, and being found non-compliant damages trust with customers and business partners. This hurts future opportunities for commercial dealings. 
• External Dispute Resolution (EDR). If the debt is related to a financial service, debtors can complain to an EDR scheme like the Australian Financial Complaints Authority (AFCA), which can order compensation and prevent unlawful collection practices. 

Why Aggressive or Harassing Tactics Backfire

Some believe that aggressive tactics, such as heavy-handed communication or harassment, will prompt debtors to pay faster, but this is not the case. Aggressive or harassing behaviour usually backfires, making debt recovery harder and exposing the business to legal risks. 

Aggression Triggers Regulator Action

Harsh tactics often lead to consumer complaints. Every complaint filed with the ACCC, ASIC, or state consumer affairs bodies must be investigated. When complaints pile up, regulators may initiate a formal investigation into the company’s practices. These investigations are costly, time-consuming, and carry the risk of major penalties. 

Escalates to Lawsuits and Formal Disputes

Claims of harassment can quickly escalate into full-blown lawsuits and formal disputes lodged with regulatory bodies. When a debtor feels threatened or treated unlawfully, they stop communicating—and then seek legal aid or financial counsellors. This immediately turns a simple overdue invoice into a legal liability for the creditor, costing thousands of dollars in legal fees before the debt is even addressed. 

Claims Can Be Invalidated 

Even minor breaches can invalidate the business’s claim or significantly slow down recovery. If a court or ombudsman finds that the debt collection efforts were unconscionable or misleading, they can reduce the claimed amount, waive interest and fees, or dismiss the claim entirely. Harassment does not expedite things; it simply provides the debtor with a strong legal defence against a creditor’s claims.   

Best Practices for Lawful Debt Collection

Collecting debts fairly and professionally protects your business. Here are key practices that can help you stay compliant while maximising recovery: 

Follow the ACCC/ASIC Guidelines Strictly 

The joint debt collection guidelines from ACCC and ASIC set the standard for acceptable conduct. They cover how to communicate respectfully, handle disputes fairly, consider hardship, and meet compliance expectations. Following them helps you build trust and avoid costly penalties. 

Maintain Clear, Documented Communication Records

Documentation is your best defence against a complaint or lawsuit. Every single attempt at debt collection must be recorded. Track contact attempts, call times, the content of call scripts, emails sent, and the debtor’s response history. This detailed trail proves you acted reasonably, ethically, and within the required frequency limits. Conversely, a lack of documentation often results in a finding against the creditor. 

Verify Debts Before Contacting Debtors

Incorrect data is a top cause of legal disputes. Before reaching out, verify the debt amount, the debtor’s identity, and the contractual basis for the claim. Pursuing the wrong person or wrong debt amount is an immediate breach of the Australian Consumer Law’s statutory prohibition of misleading conduct. 

Train Your Staff Thoroughly 

Frontline staff making the calls are the highest risk point for any business. They need comprehensive training on boundaries, particularly regarding harassment and misleading behaviour. 

Internal debt collection teams must know exactly when and how to issue required written notices. Investing in staff training is cheaper than paying a single ASIC fine. 

Use Licensed, Professional Debt Collectors 

If you lack the internal expertise or capacity for in-house compliance, consider outsourcing to licensed debt collectors. Professional debt recovery agencies understand regulatory requirements and handle debt collection in an ethical and legal manner. Using reputable collectors protects your business reputation and balance sheets. 

Bluechip Collections—Your Partner in Compliant Debt Collection

In Australia’s competitive business environment, long-term success depends on operating ethically and within the bounds of the law. Lawful debt collection is not a burden but a smart business practice that safeguards reputation and ensures legal certainty. 

Bluechip Collections stands out as a leader in ACCC and ASIC-compliant debt recovery. Our team specialises in efficiently recovering both commercial and consumer debts while upholding the highest professional standards. 

With thorough knowledge of debt recovery laws and proven strategies, we manage the entire process seamlessly, reducing client stress and delivering results. Contact us at 1300 462 114 or complete our contact form to schedule a free consultation.