Size of the Debt Collection Industry in Australia

Size of the Debt Collection Industry in Australia

The debt collection industry in Australia involves third-party agencies that recover unpaid debts on behalf of creditors, either through contingency fees or by purchasing bad debt at a discount. It is a regulated sector under frameworks like the Australian Consumer Law and the Debt Collection Guideline, serving banks, utilities, telecoms, and retailers. The industry benefits from economic downturns (e.g., rising defaults) but faces challenges like reduced debt ledger supply from banks and consolidation. Below is a breakdown of key metrics for 2025, based on the latest industry data.

Overall Market Size

• Revenue: The industry is valued at approximately AUD 1.0 billion in 2025. This reflects a decline from AUD 1.1 billion in 2024 (a -5.0% drop), driven by subdued debt ledger supply and intensified competition for available portfolios. Revenue has fallen at a compound annual growth rate (CAGR) of -8.8% from 2020 to 2025, with a projected further -2.2% dip in 2025-26.
• Number of Businesses: There are 507 enterprises in the industry as of 2025, down from around 598 in 2023. This represents a decline at a CAGR of -3.6% from 2020 to 2025, due to mergers, acquisitions, and exits amid consolidation (e.g., Credit Corp Group acquiring Collection House).
• Employment: The sector employs about 5,071 people in 2025, focusing on roles like collectors, compliance officers, and analysts. Wages total around AUD 300-400 million annually, with average salaries reflecting a mix of small agencies and larger firms.
• Profit Margins: Average profit is estimated at 5-8% of revenue (roughly AUD 50-80 million industry-wide), pressured by rising operational costs (e.g., technology and compliance) but supported by contingency-based models.

Key Segments and Breakdown

The industry is segmented by collection type and client sector. Contingency collections (fees on recovered amounts) dominate volume, while purchased debt (buying portfolios) yields higher margins. Here's a 2025 estimate:

Geographic Distribution: New South Wales leads with ~32% of businesses (230 firms), followed by Victoria (24%, 173 firms) and Queensland (18%, 134 firms). These three states account for 74% of the market, concentrated in urban areas like Sydney and Melbourne.

Growth Trends and Projections

• Historical Growth: From 2020-2025, the industry contracted due to post-COVID recovery (fewer defaults) and banks retaining more in-house collections. However, total debt under management remains high at over AUD 22 billion (as of 2021 data, with 8 million files), indicating underlying demand.
• Future Outlook (2026-2030): Modest recovery expected at a CAGR of 1-2%, potentially reaching AUD 1.1-1.2 billion by 2030. Drivers include:
• Rising delinquencies from economic uncertainty (e.g., interest rate impacts on households).
• Technological adoption (e.g., AI for segmentation, reducing costs by up to 70%).
• Regulatory shifts promoting ethical collections, boosting outsourcing.
• Challenges: High competition from in-house teams (e.g., at banks), data privacy risks, and skills shortages. Opportunities in hybrid models (remote/virtual consulting, growing at 7.5% CAGR).

Challenges: Shortage of debt ledgers from banks has squeezed margins; smaller firms (73% employ "<" 5 people globally, similar in Australia) face consolidation risks. Opportunities lie in diversification (e.g., BNPL debt recovery) and digital tools.

Data Sources and Methodology

Estimates are primarily from IBISWorld's 2025 Debt Collection Industry Report, cross-referenced with the Australian Collectors & Debt Buyers Association (ACDBA) for debt volumes and company databases like BoldData for business counts. Global benchmarks (e.g., from Cognitive Market Research) were scaled for Australia (~3-4% of the USD 30.5 billion global market). For deeper insights, such as firm-level data or regional forecasts, consult full IBISWorld reports or ACDBA resources. If you need comparisons to related sectors (e.g., investigations), let me know!