Australia's Debt Collectors Still in a Rut

Hopes that Australia’s debt collection industry might have resolved its woes of recent years may have been dashed, with Melbourne-based RMG suffering deteriorating finances and D & B Australasia again delaying its planned stockmarket float.

After being asked by the Australian Stock Exchange to clarify an earlier profit warning, RMG said its operating profit for the year to June 30 would be about $500,000. Though RMG did not detail the reasons for its latest woes, its bottom line result is expected to be another net loss.

While its shares have slipped to 2.3¢, it said it was trading at a monthly operating profit and its financial condition was “sufficient to warrant continued quotation of its securities”. It also hoped to finalise “the purchase and funding” of an undisclosed contract that would “mitigate the downgrade”.

RMG and D&B have in common their work for National Australia Bank in the past year to try to collect consumer debts on credit cards, personal loans and mortgages when the bank’s internal collection department passes the debts on to external agencies. The appointment of the two followed a decision to move away from a panel of 13 agencies last year, but NAB is thought to be one of the better banks at collecting debts, making the contract difficult to make money on.

RMG has also bought portfolios of older debts that NAB agreed to sell for a large discount to the face value.

Sources say that D&B has walked away from the NAB contingency collections contract after one year, reflecting concerns that the performance guarantees required were too high to make them profitable.

For this complete story, please visit Australia’s Debt Collectors Still in a Rut.