The National Hardship Register (NHR) is a joint initiative between the Australian Collectors and Debt Buyers Association Limited (ACDBA) and the community sector to address the serious issue of long-term and severe financial hardship experienced by a small but growing number of vulnerable consumers.

The purpose of the industry funded NHR is to protect those consumers who are experiencing long-term and severe financial hardship from unnecessary debt collection activity.

The NHR initiative addresses the long standing problem of inefficient information flow which prevents early resolution of situations where vulnerable consumers need assistance but debt collectors and financial service providers first need information to be able to understand and respond with such assistance. The solution centres on facilitating the flow of necessary information in a way that does not disadvantage the vulnerable consumer.

The NHR acts as an efficient and cost-effective mechanism for financial counsellors and industry to avoid futile debt collection activity involving debts for this group of consumers.

The National Hardship Register (NHR) is a joint initiative between the Australian Collectors and Debt Buyers Association Limited (ACDBA) and the community sector to address the serious issue of long-term and severe financial hardship experienced by a small but growing number of vulnerable consumers.

The NHR builds on the very positive work of the National Bulk Debt Project (an initiative of Legal Aid NSW, Victoria Legal Aid and West Heidelberg Community Legal Service) which negotiated debt waivers on behalf of many vulnerable consumers.

Described by some observers as “the evolution of Bulk Debt”, the NHR is intended to be a permanent and industry-funded mechanism to protect those vulnerable consumers in long-term and severe financial hardship from unnecessary and futile debt collection activity and provides an alternative to the harshness of bankruptcy.

The NHR is a list of vulnerable consumers who have applied for listing in accordance with the Eligibility Criteria – the list is compiled and maintained by the ACDBA (at the informed consent of the consumer) and circulated to participating creditors.  Participating creditors will not sell or collect on, and may not buy debts belonging to these listed vulnerable consumers and will waive any debts (that they have the legal right to waive) 3 years after the consumer has been included on the NHR.

To be included on the NHR, a consumer must meet the Eligibility Criteria and make an application at no cost via a not-for-profit financial counsellor (counsellor).  Broadly, the eligibility criteria are:

  • the consumer must have an income around that of a basic Centrelink income;
  • the consumer must have no assets other than those protected in bankruptcy; and
  • the consumer’s financial circumstances must have no reasonable prospect of improving in the foreseeable future.

Broadly the process has 6 steps as follows:

NHR Process

  1. the counsellor identifies the consumer as being in long-term & severe hardship and discusses available options with the consumer who makes the decision to apply for listing;
  2. the counsellor submits the consumer’s application to NHR;
  3. if the consumer meets the NHR Eligibility Criteria, the consumer will be listed on the NHR;
  4. the NHR listing is distributed to participating creditors who will not sell or collect and may not buy debts relating to the listed consumer;
  5. the consumer's debt is ‘provisionally finalised’ subject to Right of Challenge by the participating creditor; and
  6. the consumer's debt is ‘unconditionally finalised’ by the participating creditor.

A 2 year pilot concluded on 31 December 2015 involving a limited number of participating creditors (debt collectors/debt buyers) and financial counsellors. Given the success of the pilot the NHR will be extended more broadly to other participating creditors.

The NHR is managed by the ACDBA and overseen by a committee comprising of three consumer representatives, three industry representatives and an independent chair – the same governance structure as that of the External Dispute Resolution Schemes. The independent chair is Mr Digby Ross, formerly of ITSA (now retired).

The NHR eligibility criteria, operating model and compliance program follows considerable engagement and consultation with a wide range of stakeholders including debt collectors and buyers, banks, financial counsellors, consumer lawyers, regulators and external dispute resolutions schemes.