Photo: 123RF
Hundreds of cases of concerns about debt collection activities have been reported to the Commerce Commission over the past year.
Financial mentors told RNZ on Wednesday that a review of the Fair Trading Act was needed because debtors were on the "back foot" when dealing with debt collectors.
They said they were hearing stories of being intimidated and coerced.
Jake Lilley, spokesperson for FinCap, the network of financial mentors, said there needed to be clearer understanding of what was acceptable behaviour from debt collectors and a clearer mechanism for the regulator to take action.
"All the regulator can do to my reading at the moment is to take someone to court when there is enough evidence and the court can say stop doing that."
He said a review was needed to work out what was acceptable and when.
Lilley said people being targeted by collectors were often in poverty and not able to pay. Some were being called repeatedly and visited at friends' or family's houses.
"There's not a good mechanism at the moment to say you won't eat if I force you to make this payment...maybe it could be a smaller payment, maybe it's at that point where it's been sold on for cents on the dollar so it's not worth that much. We need that pressure release valve in the economy we have where things don't work out as planned."
The Commerce Commission said it had 208 concerns reported in the last 12 months in which the primary issue was debt collection.
"Debt collectors have a responsibility under the Fair Trading Act not to give false or misleading information or create a misleading impression about the service or their abilities.
"Debt collectors must also be able to substantiate any claims they make and must not harass or coerce someone in to repaying a debt.
"Alongside outreach work to remind debt collectors of their responsibilities under the Act, the commission has also taken cases against those who fail to meet their statutory obligations and will continue to prioritise enforcement action to protect vulnerable consumers. Protecting vulnerable consumers is one of the commission's long-term enduring priorities, which are core to meeting our responsibilities as a competition, fair trading, and consumer protection regulator."
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