The Australian Financial Security Authority (AFSA) is today launching a campaign to raise awareness of dodgy insolvency advisors who exploit people when they seek help to manage debt.
AFSA is particularly concerned that those experiencing financial stress because of the economic impact of COVID-19 may be easy targets.
“People who find themselves dealing with large debts for the first time as a result of COVID-19 may be tempted to turn to advisors who say they have a quick fix and later find out what they’ve done is illegal,” AFSA’s Deputy Chief Executive Gavin McCosker explained.
Mr McCosker said it is vital the public know that dodgy advisors exist and what to watch out for.
“It’s not always easy to spot a dodgy advisor, but if someone offers a solution to your financial problems that sounds too good to be true, it probably is,” he said.
Tell-tale signs that an insolvency advisor shouldn’t be trusted include:
- promising a payment to get out you out of bankruptcy within a few months
- recommending you include false, exaggerated or fake debts in a bankruptcy application
- offering to organise your affairs so your property will be protected if you go bankrupt
- advising that bankruptcy or a debt agreement will not affect your credit rating.
AFSA has developed resources, including a short video, to increase awareness of the risks of dealing with dodgy advisors. Anyone facing financial hardship should contact one of the registered insolvency practitioners.
Mr McCosker said a few dodgy advisors have the potential to damage the industry.
“Insolvency practitioners say dodgy advisors are their number one concern. If an advisor persuades someone to hide or dispose of their assets before they enter into a debt agreement or bankruptcy everybody loses.”
AFSA takes action against these advisors to protect the industry and those experiencing financial trouble.
“When we discover or are notified about a dodgy advisor, we investigate and take action. Each year we inspect hundreds of personal insolvency administrations, and attend creditors’ meetings if dodgy activity is suspected,” said Mr McCosker.
“We rely on the industry and members of the community to report any activity that has the potential to take unfair advantage of people who use the personal insolvency system.
Report any concerns about potential dodgy behaviour or suspicious activities to AFSA via the online tip off service.
For more information, visit where to find help.