Under the online debt-recovery system, which uses an algorithm to match tax office income information with Centrelink data in a process that has been criticised as flawed and unlawful, recipients are required to prove they don't have debt, instead of the onus of proof residing with Centrelink.

"Current Centrelink debt collection processes fall well below acceptable standards for even industry practice (which still needs significant improvement)," Financial Counselling Australia has told a Senate inquiry.

The peak body wants Centrelink to not only benchmark its debt collection practices on the standards set for the banking sector, but aim for higher standards, considering the financial industry's practices have been exposed through the Hayne Royal Commission.

Centrelink's practices don't account for the likelihood that the agency will be collecting debts from vulnerable people, Financial Counselling Australia said.

"We believe the failure to take extra care with vulnerability makes the debt collection process unsafe and unfair for many people."

Centrelink should be exceeding the industry standards set for the banks, which are higher than those that apply to the government agency, the peak body said.

Banks are required under laws regulated by the Australian Securities and Investments Commission (ASIC) to have a reasonable basis to raise a debt, and the guidelines distributed by ASIC say the onus of proof rests with the party alleging there is a debt.

"Binding standards are needed to ensure that Centrelink complies with best practice at all times."

Dispute over debts with Centrelink should be able to be settled through a similar process to the Australian Financial Complaints Authority, the submission said, pointing out that process takes less time, is decided "on the papers" and has assistance for vulnerable people.

The Administrative Appeals Tribunal, where disputes are currently decided after going through an internal process, is "arguably not a user-friendly process and people should be able to access a free and independent dispute resolution scheme which is accessible and informal," Financial Counselling Australia said.

Just a few hundred cases have made it to the Tribunal, where many have been overturned, after they have been through an internal review within Centrelink.

In its own submission, the Department of Human Services, denied staff were required to finalise a certain number of debt reviews each week, as had been reported in the media.

Instead the department said "Staff are coached regularly and will set aspirational targets for review finalisations in line with their individual learning and development needs".

A leaked image of a whiteboard with the number of reviews finalised next to staff members' names was reported by Nine News, but the department said a system called BOOST (Build Ownership Optimise Strength Teamwork) "works by creating visual links between data and people".

"It is a staff-led process to enable our people to measure their performance and coach and support each other at work."

The department also said that in the cases where a decision had been overturned after an official appeal, manual data entry issues were often to blame, not the system itself.

"The Department recognises that some customers find the process difficult to understand," the submission said.

"Most customers with an overpayment have simply not understood their obligations or have made a mistake.

"Our staff are trained to support customers with these conversations, and this includes explaining how an overpayment is calculated, and also talking to people about their obligations so that future discrepancies do not arise."

The department says the onus to explain discrepancies being on the welfare recipient comes from the Social Security (Administration) Act and "has not changed".

Do you have a Centrelink debt you think is unfair? Email sally.whyte@canberratimes.com.au