Financial Counselling Australia is delighted with today’s Government announcement about the establishment of an independent body to accept contributions from industry to fund financial counselling services.
FCA CEO Fiona Guthrie said the announcement was momentous for the financial counselling sector, coming after years of advocacy. It is an important recognition that the businesses that benefit when their customers receive advice and support from a financial counsellor should also contribute to these costs.
We thank the industries and companies that have committed to the new model and are doing the right thing by their customers: the banking, insurance, energy retail and online wagering industries, as well as individual companies: Telstra, Tabcorp, Credit Corp and Afterpay. It is a real achievement that such a wide variety of industries have come together to work collaboratively with the community sector.
The implementation of an industry funding model, with funding administered by an independent body, was recommended by the Sylvan Review of financial counselling in March 2019. This was an appropriate, and innovative, response to the problem of long waiting lists to see a financial counsellor, including some people being turned away.
A subsequent 2022 analysis of demand estimated the funding gap for financial counselling was $18.1 million a year.
However, because some industries and companies have declined to be involved, the likely figure will be closer to $10 million a year.
The additional funding however will still make an impact and will see an estimated 9,000 more Australians get face-to-face financial counselling and enable the National Debt Helpline to handle an extra 17,000 calls a year.
FCA CEO Fiona Guthrie said the financial counselling sector will be delighted to see the industry funding model finally become a reality, in what is a world-first.
“This is a huge step forward for the financial counselling sector,” Ms Guthrie said. “It will see many more people able to get the help they need at a time when the cost-of-living crunch is hitting hard and where financial counsllors are struggling to keep up with demand.”
“We call on the industries and companies that are yet to commit to also join the model.”
These are the telecommunications industry (apart from Telstra); the Buy Now Pay Later industry (apart from Afterpay); finance companies, and the debt collection industry (apart from Credit Corp).
“Naturally, we would have loved to see contributions from more of those industries who financial counsellors engage with daily. But we say to them it’s not too late to get involved and become part of the solution.”
Ms Guthrie said the patchy response from industries confirmed that the ultimate and most desirable outcome is a mandatory funding model, not a voluntary one.
“A mandatory model has strong support from many stakeholders and is a more equitable approach. The experience and effort in trying to secure voluntary contributions have highlighted the inherent flaws in a voluntary model.
“But this is a great first step which gives us a launch pad to work towards a viable, longer-term solution and make industry funding an enduring feature of funding for financial counselling.”
Ms Guthrie said the Minister for Social Services, Amanda Rishworth, had shown great leadership in progressing the model, while the former Minister for Social Services, Anne Ruston, had done much of the foundational work on the model. The Australian Banking Association has also played a key role in communicating with industry stakeholders. Ms Guthrie also thanked the Department of Social Services for the role it has played in policy development, liaison and coordination.
The industry funding model is additional to existing funding from federal, state and territory governments.
Media contact: Mike Bruce, 0403 920 189, [email protected]