Debt collectors often take approaches that are deliberately distressing and highly unsuccessful - that's the view of a research paper which questioned financial mentors on their experience of the sector.
Victoria University senior lecturer Victoria Stace and Liz Gordon, of Pukeko Research, with FinCap - the umbrella body for financial mentors, interviewed financial mentors about the people they support, many of whom experience debt collection.
While the aim of financial mentors is to help people get their finances in order and learn
skills to manage their financial affairs into the future the research found a huge part of this work involved dealing with debt.
"Many mentors noted that most, if not all, of their clients have unresolved or out of control debt, " the researchers said.
And the study reported many instances of poor conduct by debt collectors with the use of multiple contacts, including "up to six phone calls a day", multiple text messages and/or emails to the debtor.
While the goal of the contact was to "put pressure" on the client the most common response to this tactic reported by mentors was that debtors would stop answering their phones, making it difficult for mentors (and collectors) to contact them.
Borrowers were also targeted by phone calls at their work and sometimes threats by debt collectors who said they would turn up at the person's work if they did not pay.
"Clients might have been bombarded either over one debt or because they had multiple debts. Threats of court action and repossession of goods would appear to be reasonably common, even when these were not possible. There were often implications for clients' mental health and wellbeing," the researchers found.
The financial mentors also noted a very wide range of fees being charged to debtors both because of payment defaults and the charges added by the debt collector with one noting a "standard" addition of debt collection fees of 30 per cent.
The research has prompted FinCap to call for tougher regulation to counter unfair debt collection practices.
FinCap chief executive Ruth Smithers said whānau facing hardship should not be up against unfair debt collection which makes matters much worse.
"With a lack of oversight for debt collection in Aotearoa there is some totally unacceptable behaviour and reckless processes going unchecked. People that are already struggling are up against it.
"We need changes to the Fair Trading Act that lead to robust regulatory oversight, clear industry guidelines and effective protections for people looking to get back on their feet, when in debt."
Smithers said it also wanted a judgment-proof debtor policy to prevent up to 40 per cent of people's benefits being taken away by attachment orders before it reaches their bank account to pay for food.
"Financial mentors are doing great work to prevent debt spiralling out of control, but we're only dealing with the tip of the iceberg - we need robust regulation for everyday fair practice."