AFebruary/MarchGENT 2021 | Volume 54 Issue 1 Essential reading for those involved with Collections, Investigations & Field Services in Australia www.imal.com.au In times of crisis, we’re here for you. Guides and resources to help businesses manage their risks and navigate insurance implications during COVID-19. Visit now: ajg.com.au/pandemic-preparedness To the extent that any material in this document may be considered advice, it does not take into account your objectives, needs or financial situation. You should consider whether the advice is appropriate for you and review any relevant Product Disclosure Statement and policy wording before taking out an insurance policy. 0420-1.1 Built for start-ups. Scalable for growth. Automate • Customize • Import • Cloud • Premise • Integrations Demo.Collect-Cloud.com | CollectSoftware.com.au AGENTFebruary/March 2021 | Volume 54 Issue 1 CONTENTS ON THE COVER 60 years strong 7 MEDIA & NEWS 4 8 FORUM Elite PI 8 Credit health 101 10 HISTORY 60 years strong 7 PRIVACY Human error dominates 16 10 REGULATORY Occupational mobility 12 INSTITUTE From the President: David Combrink 18 From the CEO: Alan Harries 19 12 AGENT Editor General, Membership and No part of this journal may be reproduced Contributions, articles, letters and comments Service Directory Enquiries or transmitted in any form or by any February/March 2021 Volume 54 Issue 1 means, electronic or mechanical, including from readers should be directed to: Institute of Mercantile Agents Ltd. AGENT is the official bi-monthly journal of photocopying and recording, or by any the Institute of Mercantile Agents Ltd. Institute of Mercantile Agents Office hours: 8.30am-5.00pm EST information storage or retrieval system without 17B Denney Street the prior written permission of the publisher. 17B Denney St Broadmeadow, NSW 2292 [email protected] Broadmeadow, NSW 2292 Phone (02) 4927 0477 Fax (02) 4927 0677 The views contained in articles by contributing [email protected] authors are not necessarily those of the www.imal.com.au Phone (02) 4927 0477 Fax (02) 4927 0677 PO Box 233, Waratah NSW 2298 publisher, editor or directors of the Institute of ABN: 94 000 514 483 [email protected] Advertising Enquiries Mercantile Agents Limited. Articles and content may have been edited, but remain the copyright ISSN: 1443-3443 The material deadline is the 1st of the Phone (02) 4927 0477 Fax (02) 4927 0677 month preceding publication. of the author. It should be noted that articles ISSN: 2208-3189 (Online) [email protected] are of a general nature and are not a substitute Editorial Director Design and Production for appropriate professional advice. Although Alan Harries Abigail Thompson all reasonable attempts have been made as to Phone (02) 4927 0477 Fax (02) 4927 0677 Phone (02) 4927 0477 accuracy of submitted advertisements and their [email protected] bona fides, no warranty is given to any party. [email protected] The right is reserved to accept or reject any www.imal.com.au articles or advertisements. www.imal.com.au | Feb/Mar 2021 | AGENT | 3 MEDIA & NEWS BOOK sold he future of Collection House Limited (Collection House) has been of keen interest to its shareholders, market analysts and Tindustry observers for an extended period, following the company suspending trade on the ASX in early 2020 and commencing a comprehensive Recapitalisation Process as an outcome of a Strategic Review - at the close of 2020 a significant transaction intended to re-set Collection House’s future was announced. In addition to a review of Collection House’s operating model and collection strategies, the Strategic Review reportedly identified the need to write-down the value of the company’s purchased debt ledger (PDL). Collection House explains the write-down captured the net present value impact of the adjusted cash collection profile from adopting more customer-focused collection strategies in its PDL business and in particular, a lower reliance on legal activity. In an announcement to the ASX on 24 December 2020, Collection House detailed the outcome of its Recapitalisation Process (the Transaction), noting the material features were: • The disposal of certain PDL assets (Sale Assets) to Credit Corp Group Limited for an up front purchase price of approximately $160 million; • The prospect of Collection House also receiving additional consideration, up to a maximum of $15 million, over an eight year period, dependent upon the future performance of the Sale Assets; • Proceeds from the Transaction would be immediately applied in reduction of the company’s senior debt; • Collection House’s existing lenders agreed to provide a new 3 year senior debt facility of approximately $45 million on commercial terms; and • Credit Corp Group Limited would provide Collection House with a short term loan of $15 million. The announcement further outlined the Transaction would leave Collection House “with a capital-light, high return on equity servicing model, which it believes will create more sustainable and predictable shareholder value over time. The company retains its best in class capabilities (people, systems and processes), allowing it to provide end-to end receivables management services to clients and customers under either contingent agency collections or purchased debt frameworks”. The full Statement by Collection House can be read here. On 24 December 2020, Credit Corp Group Limited (Credit Corp) announced entering the binding agreement to acquire the PDL book of Collection House Limited. Mr. Thomas Beregi, CEO of Credit Corp, commented that the acquisition was an opportunity to acquire one of the largest PDL books in the Australian market. “Acquisition of Collection House’s Australian book will be the largest single PDL purchase in Credit Corp’s history” he said. Mr Beregi noted that the acquisition would be fully funded using available cash without Credit Corp needing to draw on its presently unutilised $375 million of funding lines. “Even after this acquisition, Credit Corp will retain almost $400 million in available cash and funding lines to deploy as and when suitable investment opportunities arise across all of its segments” he said. [Source: Announcements by Collection House Limited and Credit Corp Limited - 24 December 2020] 4 | AGENT | Feb/Mar 2021| www.imal.com.au MEDIA & NEWS BANKRUPTCY ASIC approves SIC has approved variations to the Banking Code changes Aof Practice, as proposed by the Australian Banking Association - the variations do the following: ttorney-General Christian Porter in December 2020 announced that • Amend the Code’s definition of ‘banking services’ AAustralia’s personal bankruptcy threshold will be set at $10,000. to address an anomaly in the Code’s previous The threshold was temporarily lifted from $5,000 to $20,000 on 24 wording that had the unintended result of March 2020 in response to the COVID pandemic. The new threshold of excluding certain types of small business banking $10,000 will be permanent, and came into effect on 1 January 2021. customers who would otherwise meet the Code’s “The new permanent $10,000 threshold will ensure that Australians in definition of ‘small business’ financial difficulty are not made bankrupt over relatively small amounts • Make some minor amendments to the Code’s of debt,” Attorney-General Christian Porter said. definition of ‘small business’ “This also accounts for the changing value of money since the $5,000 • Extend the application of the Code’s COVID-19 threshold was last increased in 2010, as well as changes to debt levels Special Note, which allows for special application since that time.” of specified Code provisions in light of the In mid-January 2021, the Australian Government as part of its response extraordinary external environment caused by to the effects of the pandemic, sought further stakeholder views on COVID-19, for a further six months until 1 possible changes to the bankruptcy system involving: the default period September 2021 of bankruptcy; debt agreements; personal insolvency agreements; and • Specify situations in which banks may decline offence provisions. to continue dealing with a representative that a The reduction of the bankruptcy period from 3 years to 1 year is again customer in financial difficulty has appointed, if under consideration: first raised in 2015 with a Bill introduced into the bank reasonably considers that representative Parliament in 2017 but which lapsed in April 2019 when Parliament is no longer able to act in the customer’s best was prorogued for the election, the proposal is now being reintroduced, interests reportedly with some refinements to discourage abuse by “rogue, reckless • Align the Code’s timeframes for responding and repeat bankrupts”. Despite such refinements, the concept of reducing to complaints with the updated timeframes in the bankruptcy period is likely to get a mixed reception from stakeholders. ASIC’s Regulatory Guide 271: Internal dispute The Government’s Discussion paper can be read here. resolution, which is due to commence on 5 [Source: Media Releases by Attorney-General October 2021. - 18 December 2020 and 13 January 2021] [Source: ASIC Media Release - 8 January 2021] INSOLVENCY reforms ONLINE chats he Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 was passed by both houses on 10 December 2020 and assented The next quarterly online Chats of members T to on 15 December 2020. This Bill is to implement insolvency reforms to for the sectors will be on: support small business, namely: Investigations • small business restructuring: