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What the Settlement Distribution Scheme is
The Commonwealth and Gordon Legal settled the robodebt class action. The Federal Court approved the settlement on 11 June 2021.
The Commonwealth made settlement payments to eligible, registered group members in place of interest on money they repaid to eligible income compliance debts.
Settlement payments were distributed to all eligible, registered group members in September 2022.
The plan for distributing settlement payments is set out in the Settlement Distribution Scheme Implementation Plan. It was a requirement of the settlement agreement. It explained how the Commonwealth would do all of the following:
- work out who is eligible for a settlement payment
- find and tell group members of the settlement outcome and their eligibility
- give options and the timeframe for group members to dispute their eligibility, if they wish
- calculate and distribute settlement payments.
The Commonwealth appointed an independent Scheme Assurer. This was a Federal Court requirement. They ensured the settlement distribution was equitable and completed in line with the settlement agreement.
How we implemented the scheme
We had to complete a number of steps before we started making settlement payments. The Implementation Plan for the Settlement Distribution Scheme gives a timeframe for each step.
The Scheme Assurer and Gordon Legal reviewed and confirmed each step of the plan was completed before we progressed to the next step.
Key steps in the distribution process were:
| Phase | Action |
|---|---|
| Phase 1 |
Categorisation: Services Australia identified group members who would and wouldn’t get a settlement payment. Timeframe: Completed in October 2021. |
| Phase 2 |
Notification: We worked out the category of each group member’s debts. We wrote to group members to let them know if they’re eligible for a settlement payment or not. We also explained how to get more information, ask for a review and update their preferred payment destination. Timeframe: Completed. We notified group members of their debt category in November 2021. Group members who needed to register a payment destination had until 11 February 2022 to do this. |
| Phase 3 |
Calculation and payment: We worked out how much to pay each eligible registered group member. We wrote to all eligible registered group members to tell them how much they’d get. We did this before we paid them. Timeframe: Completed in September 2022. |
Who was eligible
Group members were eligible for a settlement payment if they paid money towards a debt that was based in full, or in part, on averaged Australian Tax Office (ATO) income information.
Not every group member was eligible for a settlement payment.
Group members who didn’t make any repayments on a debt raised using averaged income information were not eligible for a settlement payment.
Each debt fell into one of the following categories:
| Category | Outcome |
|---|---|
| Category One, Not Eligible |
Group members whose debts were based on averaged ATO income information and who made no repayments. These group members had their averaged debt zeroed. This meant they did not have to repay the debt. These group members didn’t get a refund, or a settlement payment. |
| Category Two, Eligible |
Group members whose debts were partly or wholly based on averaged ATO income information, and had made a repayment towards those debts. These group members got a settlement payment. This payment was in addition to the refund that these group members got under the government’s announcement on 29 May 2020. |
| Category Three, Eligible |
Group members whose debts were initially based on averaged ATO income information, but then were recalculated using payslips or bank statements, and had overpaid the recalculated debt. These group members got a settlement payment for the overpaid amount of their recalculated debt, even if ;the overpayment was refunded or applied to pay a valid debt. This group did not get an additional refund under the government’s announcement of 29 May 2020, as any original overpayment would've been refunded at the time of recalculation. |
| Category Three, Not Eligible |
Group members whose debts were initially based on averaged ATO income information, but then were recalculated using payslips or bank statements, and they hadn't overpaid the recalculated debt. These group members didn’t get a refund or a settlement payment. |
| Category Four, Not Eligible |
Group members whose debts weren't based on averaged ATO income information. These group members didn’t get a refund or a settlement payment. |
How we notified group members if they’re eligible
We sent letters to group members about their debt category and eligibility for a settlement payment in November 2021. We sent the letters to their myGov inbox or in the post.
The letters explained all of the following:
- what category each debt is in
- whether or not they’re eligible for a settlement payment
- the deadline to give or update their bank details or payment destination
- how to ask for a review if they believe their debts are in the wrong category
- the deadline to ask for a review.
Group members had until 10 December 2021 to ask for a review. Group members could also ask for a review if they thought we hadn’t included an eligible debt.
How we calculated and distributed payments
The amount eligible registered group members received as a settlement payment depended on all of the following:
- when they paid money towards eligible debts
- how much they paid
- when they were refunded
-
and how many eligible group members registered for a settlement payment.
Settlement payments were calculated in a similar way to interest. We used the interest rates set by the Federal Court to calculate each group member’s portion of the agreed settlement sum.
Where to get more information
You can read the full Settlement Distribution Implementation Plan:
- Settlement Distribution Scheme Implementation Plan
- Settlement Distribution Scheme Implementation Plan.
A previous version of the Settlement Distribution Scheme Implementation Plan was originally published on 11 February 2021. You can view the previous version here: