Bulletin

Issue: March/April 2007

News

Report into credit disputes

A La Trobe University study has recommended education campaigns targeted at credit providers to help them handle complaints, and at vulnerable consumers to increase their awareness of services that can assist with credit problems.

The study - Dispute Resolution for Credit Consumers - calls for consideration of additional regulation, both for the credit industry’s internal handling of complaints and for external dispute resolution. It also recommends consideration be given to industry-based external dispute resolution schemes.

The report was prepared by a team headed by La Trobe University Law Professor, Tania Sourdin, a specialist in alternative dispute resolution. It was launched in March by the Victorian Minister for Consumer Affairs, Mr Daniel Andrews.

Apart from speeding up and streamlining current processes, the report also suggests reestablishing the consumer credit ‘hotline’ for debt counselling and advice about disputes, and the funding of legal aid representation through VCAT, the Victorian Civil and Administrative Tribunal.

Professor Sourdin said the study analysed the effectiveness, accessibility and procedural fairness of dispute resolution processes offered through VCAT and Consumer Affairs Victoria (CAV). It was designed to assist policy makers, the Department of Justice, CAV, VCAT and credit consumers to ensure processes function as effectively as possible.

The La Trobe study reviewed VCAT and CAV credit dispute files and surveyed consumers for their impressions about matters such as fairness of process and outcome, timeliness, accessibility, cost and effectiveness. It said user satisfaction was a criterion in determining whether or not a process was effective.

Professor Sourdin said VCAT was generally perceived as fair and that outcomes had met expectations: 60 per cent of the sample was ‘very’ or ‘fairly’ satisfied. Of the 40 per cent who were dissatisfied, 30 per cent were ‘very dissatisfied’. Some consumers considered it an impersonal environment and said at times its processes were confusing.

CAV was mostly perceived as friendly and helpful. For example, the majority of the interviewees felt that CAV got at the facts (77.6 per cent), was impartial (83.7 per cent), and produced a fair outcome (73.2 per cent). The report also considered benchmarks for dispute resolution and complaints handling, and made recommendations based on best practice standards.

It concludes that additional research is needed into credit disputes involving ‘vulnerable consumers in vulnerable regions’. The way in which consumer credit matters are handled in Magistrate courts also required further examination.