Financial Counselling Australia (FCA) has welcomed commitments by several industries to provide funding that will see more financial counsellors on the ground through a new industry funding model.
The industries and companies that will be involved are: banking, insurance, energy retail, online wagering, Tabcorp, Telstra and Credit Corp.
We are deeply disappointed with the industry players that will not participate.
These companies refer their customers to financial counsellors and benefit when they get back on track. In some cases, it is the company’s conduct itself that is the root cause of financial problems (such as mis-selling in the telco sector or the provision of unaffordable credit by some lenders). Sometimes a company’s own internal hardship processes can make a person’s existing financial issues worse.
We would have expected participation from:
- the other big telcos: Optus, TPG Telecom and Aussie Broadband
- the Buy Now Pay Later (BNPL) industry, such as Afterpay and Zip
- finance companies, including Toyota Finance, Nissan Financial Services, Pepper Money, La Trobe Financial, Liberty Financial and Latitude Financial Services (the largest non-bank lender in Australia). None of these companies has agreed to contribute funding
- the debt collection industry (other than Credit Corp).
All of these industries and companies regularly interact with financial counsellors.
It is ironic that their lack of involvement comes as ASIC only yesterday called on lenders to provide support to customers experiencing hardship. Most, if not all, of the 30 companies ASIC has written to should be involved – by our reckoning there are only 11.
Promising discussions are underway with energy network providers, who were only recently contacted, and some water businesses.
The industry funding model is additional to existing funding from federal, state and territory governments.
The financial counselling sector would prefer a mandatory funding model based on industry levies. The experience in trying to secure voluntary contributions highlights the inherent flaws in a voluntary model.
However, we see it as an important start, giving us the space to work towards a viable, long-term solution.
We thank the Minister for Social Services, Amanda Rishworth, for her leadership in progressing the model, and the former Minister for Social Services, Anne Ruston, for the foundational work she led. We also thank the Department of Social Services for the role they have played in policy development, liaison and coordination.
Quotes from FCA CEO Fiona Guthrie
“The funding from the organisations that are participating is a game-changer for financial counselling and will allow many more people to get the help they need.
“Their commitments couldn’t come at a more crucial time, as so many people grapple with the cost-of-living crunch, and where demand for financial counselling is outstripping supply.
“To the industries involved, on behalf of financial counsellors and the people they assist, thank you.
“Financial counsellors are deeply disappointed by the failure to commit by so many sectors that are responsible for adding to the demand for, and work of, financial counsellors.
“The amount of funding requested from the non-participating industries is a pittance. These industries say they care about their customers in hardship, but when it comes to doing something practical, refuse to step up.
“In February 2019, Commissioner Hayne in the Financial Services Royal Commission identified the need for predictable and stable funding for financial counselling. Nearly five years later, we are still not there. But this model is an important start.
Media contact: Mike Bruce, 0403 920 189, [email protected]