Are staff in the recovery area of banks and lending institutions permitted to be remunerated on their performance in recovering securities.

The law does not impose any specific restriction on the terms and conditions of any performance bonuses that a financial institution may pay to its staff in relation to any debt collection activities.

Under the National Consumer Credit Protection Act 2009, holders of an Australian credit license must ensure its representatives (such as their employees, directors and credit representatives, and persons who act on their behalf) are adequately trained, and are competent to engage in the credit activities authorised by the licence. This would include employees of banks who collect debts on behalf of the bank.

Regulation of third party debt collectors remains the responsibility of the states. Debt collectors are therefore exempted from licensing requirements, to avoid dual licensing.

At the Commonwealth level debt collection is subject to the provisions of the Trade Practices Act 1974 and the Australian Securities and Investments Commission Act 2001.

The Australian Competition and Consumer Commission and the Australian Securities and Investments Commission have jointly published debt collection guidelines for collectors and creditors. This was recently updated in May 2010 and sets out the Commonwealth laws that contribute to responsible debt collection; and the approach taken by the relevant regulators.