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FCA welcomes tough stance by ACMA on unlawful spamming by Sportsbet

MEDIA RELEASE

 FCA welcomes tough stance by ACMA on unlawful spamming by Sportsbet

 Financial counsellors applaud the Australian Communications and Media Authority (ACMA) for imposing the largest penalty ever given a fine of $2.5 million on Sportsbet.

The betting company will also refund customers $1.2 million after an extensive ACMA investigation found it had breached spam laws.

“We welcome ACMA’s tough stance on this sort of behaviour. Spamming people with gambling addictions is appalling and this case is even more disturbing because the people affected had tried to unsubscribe,” said Lauren Levin, the Director of Policy and Campaigns at Financial Counselling Australia (FCA).

ACMA found Sportsbet sent more than 150,000 texts and emails to over 37,000 consumers who had tried to unsubscribe. It also sent more than 3,000 texts that had no unsubscribe function.

“This sort of marketing causes real harm to people who are already suffering,” Ms Levin said.

“One former gambler told me it’s like dropping a crate of beer at the front door of a reforming alcoholic. It’s just not right.

“This is why Australia needs a proper roadmap for change across the gambling sector and this must include a total ban on all gambling advertising and marketing of this sort.”

FCA and Suicide prevention Australia yesterday released a report called “Gambling and suicide prevention: A roadmap for change”, which outlines some key recommendations.

Financial counsellors assist people experiencing financial difficulty. They provide information and advice to help people tackle their financial problems and to minimise the risk of issues occurring in the future. Financial counselling services are free, confidential and independent.

 ENDS

We ask that all articles quote the National Debt Helpline 1800 007 007 and ndh.org.au (online chat)

To arrange an interview please contact Maura Angle on 0418 334 121 maura[email protected]

Time to finally end the harm done by Cigno loans

Consumer groups and financial counsellors are urging the Australian Securities and Investments Commission (ASIC) to act now to put an end to the use of harmful lending models used to charge excessive fees on top of short-term loans.

 For over four years, fringe lender Cigno has signed people up to short-term personal loan arrangements using two-contract lending models falling within exemptions to the national credit laws, charging consumers fees well above the maximum allowable under any form of regulated credit.

ASIC is currently consulting on a proposal to ban the two models that have been used interchangeably by Cigno.

“We have been getting calls from people for years struggling to deal with outrageous and completely unjustified fees charged by Cigno on small loans. The high fees charged with these loans cause actual harm at an inconceivable rate… our data indicates our lawyers answer calls about Cigno with comparable frequency to those about the largest credit providers in Australia,” said Consumer Action Policy Officer Tom Abourizk.

“The use of these lending models by Cigno has continued for too long, leaving people in harmful debt spirals”, said Abourizk.

“ASIC has a power to intervene where conduct in a market is causing significant detriment to retail clients. Cigno’s business models are as clear an example of such detriment that financial counsellors have seen”, said Fiona Guthrie CEO, Financial Counselling Australia.

“Thousands of people are paying fees at eye-watering levels that never should have been permissible. For example, a $60 loan can attract fees charged the same day of $420. People end up trapped in debt, repaying these small loans many times over, leaving them much worse off.

“The various Cigno avoidance models have been in place now for too long and far too many people, and their children, have been harmed. We urge ASIC, and the Minister, to act as swiftly as possible.”

Amy Knox (Acting Director of Casework) at Financial Rights Legal Centre said “…the business model of lenders like Cigno is designed to avoid the law and exploit the most financially vulnerable people in Australia.

“The interventions proposed by ASIC will reduce the number of truly shocking examples of exploitation we see at our Centre, including people being charged unjustifiable fees and chased for amounts vastly in excess of the amount borrowed – we have seen cases of more than $1000 being sought to repay a $150 loan.

“ASIC’s intervention to shut down these exploitative and predatory lending models is urgently needed,” she said.

ENDS

MEDIA CONTACT

Mark Pearce- Consumer Action Law Centre
0413 299 567 [email protected]

Australian consumer groups warn UK Government against industry “self-regulation” of Buy Now Pay Later

Media Release
Wednesday, 19 January 2022
Australian consumer groups warn UK Government against industry “self-regulation” of Buy Now Pay Later
Financial Counselling Australia and the Consumer Action Law Centre have shared Australia’s experience of weak consumer safeguards for Buy Now Pay Later (BNPL), as part of the UK Government’s consultation on regulation of the sector in that country.
The consultation by HM Treasury comes after the independent Woolard Review recommended that BNPL firms be regulated “as a matter of urgency”. The Review was commissioned by the UK’s Financial Conduct Authority, equivalent to the Australian Securities and Investment Commission (ASIC).

The BNPL industries in Australia and the UK currently make clever use of loopholes in existing credit laws to operate largely unregulated. The Australian Government has so far endorsed self-regulation for BNPL via a weak voluntary Code of Practice.

Fiona Guthrie, CEO of Financial Counselling Australia says BNPL debt is causing harm and much stronger safeguards are needed:

Financial counsellors are seeing increasing numbers of people experiencing hardship exacerbated by BNPL. People are too easily becoming overcommitted and struggling to make repayments. Our recent survey found that 12 months ago 31% of financial counsellors said that half, more or all of their clients had BNPL debts. This figure is now at 84%.

While it may escape legal definitions, BNPL is credit. The relationship between BNPL and growing financial hardship is clear.

Tom Abourizk, Policy Officer at Consumer Action Legal Centre, says Australia’s self-regulation of the BNPL industry through a voluntary industry code is woefully inadequate:

An appropriate regulatory response is needed that ensures at the least that BNPL providers are required to assess whether a person can afford to repay BNPL debt.

We urge the United Kingdom government to learn lessons from Australia’s experience and take steps to ensure these products have better safeguards, in a manner that puts consumers, particularly people experiencing vulnerability, first.

Both groups say it’s important the Australian Government follow the lead of the UK and initiate an independent review to examine the harm of BNPL and identify proportionate safeguards.

Notes:

The UK Treasury’s consultation sought views from industry, community and consumer groups on the creation of a proportionate approach to the regulation of Buy-Now Pay-Later (BNPL) products. You can find FCA & CALC’s joint submission here.
Australia’s BNPL industry is self-regulated by a Code of Practice, overseen by the industry’s peak body the Australia Finance Industry Association (AFIA). The Code came into effect on 1 March 2021. Only eight of the 16+ BNPL providers have signed onto the Code.
Financial Counselling Australia conducted its survey between August and September 2021. The full report can be found here.

Media contacts:

James Hunt –Financial Counselling Australia
0452 304 193
Mark Pearce- Consumer Action Law Centre
0413 299 567

Media contact: Mark Pearce, Media and Communications Adviser, 0413 299 567, [email protected]
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Financial Counselling Australia welcomes continued funding for small business financial counselling

 

Financial Counselling Australia (FCA) welcomes the Federal Government’s announcement of continued funding for the Small Business Debt Helpline until the end of 2022.

The Small Business Debt Helpline is a free service for small busines owners in financial difficulty.  Staffed by specialist small business financial counsellors, the Helpline provides independent, confidential and practical advice to help small business owners get back on track.

“Financial counsellors have been playing a crucial role in helping people and small businesses recover from the financial impacts of the pandemic” said Fiona Guthrie, CEO of FCA. “We thank the Federal Government for its continued support of the sector because we know we are making a difference.”

The Small Business Debt Helpline can help with a wide range of issues including understanding what support may be available as well as talk through strategies for managing business debts such as loan repayments and leases.  They can also provide information about respectful exits from a business.

“It is a challenging time for many small businesses.  The earlier small business owners get help the more options they have,” said Helen Davis, General Manager of the Small Business Debt Helpline.

“Small business owners are very resilient and can be reluctant to reach out. We want them to know that we provide a listening and confidential ear. We get a lot of feedback from clients about how useful it is to be able to just talk to someone who understands,” said Ms Davis.

The Small Business Debt Helpline has helped over 2,000 small businesses since commencing operations in March 2020 as the Small Business Bushfire Financial Counselling Support Line.

FCA also welcomes continued funding for the Beyond Blue program New Access for Small Business Owners. This program provides mental health support to small businesses.

It is important to note that financial counsellors are not financial planners or advisors. They do not provide investment advice nor are they lenders.

Small business owners can call the Small Business Debt Helpline on 1800 413 828 or visit sbdh.org.au.

 

Media Contact

Helen Davis, GM Small Business Debt Helpline 0428 410 141 or email [email protected]

 

New report shows buy now pay later debt is causing significant financial stress

A new survey of financial counsellors about the impact of buy now pay later (BNPL) on their clients is a wake up call to the community about this new form of debt.

The report’s title says it all: It’s credit, it causes harm and we need safeguards.

The report was released today by Financial Counselling Australia and the state and territory financial counselling associations.

61% of financial counsellors surveyed said most or all their clients with BNPL debt are struggling to pay other living expenses. Clients are experiencing financial stress because they have become overcommitted in using the product.

“Financial counsellors are seeing people with multiple buy now pay later debts. They are really concerned that so many clients are using the product to cover essentials like food, medications and utility bills,” said the CEO of Financial Counselling Australia, Fiona Guthrie.

“This is very worrying, especially as we head into Christmas which is traditionally a time of heavy spending. Buy now pay later could leave people with a financial hangover come January,” Ms Guthrie said.

New BNPL products are continuously coming onto the market and the sector will continue to grow. BNPL can be used for small purchases such from a pair of shoes to a night out at the pub, to larger purchases of up to $30,000 for cosmetic surgery or solar panels for your house.

“As the market grows, financial counsellors are seeing more clients with buy now pay later debt. 84% of financial counsellors surveyed said that about half, most or all clients presented with BNPL debt now. This compared to just 31% a year ago,” she said.

The survey also found industry hardship practices are falling short – clients and financial counsellors are facing significant challenges when addressing hardship with the companies that provide these products.

“Financial counsellors want to ensure BNPL is a safe product for everyone. We know that many people find the product useful, but as our survey shows many people are also experiencing harm,” said Ms Guthrie.

This is consistent with last year’s release of an Australian Security and Investments Commission (ASIC) report which showed one in five BNPL users cut back or went without essential items, such as food, due to being overcommitted with BNPL.

BNPL is credit and like other credit products should be regulated under the National Credit Code. The exact form of that regulation however needs to be determined. This type of investigation is exactly what both the UK and New Zealand governments are currently doing in relation to BNPL in their jurisdictions.

“We are therefore calling on the Australian Government to commission an independent review of the existing legal framework, with a view to developing a fit for-purpose regulatory response that will make BNPL safer for all users. Undertaking that review should be a priority,” said Ms Guthrie.

248 financial counsellors responded to the survey, from approximately 950 financial counsellors nationally. That’s a response rate of 25%.

Financial counsellors work in community-based organisations. They offer free and confidential advice to help people in financial hardship get back in control of their finances.

They are different to financial planners and advisors. Financial counsellors do not offer wealth creation strategies or lend money.

ENDS

The full report can be found here.

Video grabs can be found here and audio grabs can be found here.

Order of talent is:

  • Jackie – A client who used BNPL for urgent dental work and is now owes more than $2000.00 she cannot afford. She is on a disability pension.
  • Fiona Guthrie – The CEO of Financial Counselling Australia
  • Deb Shroot – A financial counsellor with the National Debt Helpline.

For comment please contact Georgia Lenton-Williams on 0422 707 136 [email protected] OR Maura Angle on 0418 334 121 [email protected] 

The State/Territory Executive Officers are also available for comment:

Executive Officer of Financial Counselling Victoria, Dr Sandy Ross – 0417 557 420

Executive Officer of Financial Counsellors Association of Western Australia, Melanie Every – 0406 740 197

Executive Officer of South Australian Financial Counsellors Association, Kate Fox – 0423 085 432

Executive Officer of Financial Counsellors Association of NSW, Jo Parker – 0466 351 400

Executive Officer of Financial Counsellors Association of Queensland, Jon O’Mally – 0429 061 269

Consumer advocates welcome recommendation for stricter controls of credit funded gambling online

 

Financial Counselling Australia (FCA), Financial Rights Legal Centre and the Consumer Action Law Centre welcome the Parliamentary Joint Committee on Corporations and Financial Services’ recommendation for legislation to prohibit online gambling operators from accepting credit card funded deposits.

Yesterday the Committee released its report, which recommended that gambling companies be prohibited from accepting credit card funded betting, including via e-wallets, buy now pay later and vouchers.

“Debt funded gambling is never okay. This is a sensible way to reduce some harm. We thank the Committee, led by Andrew Wallace, for championing this cause,” said Lauren Levin, FCA’s Director of Policy and Campaigns.

“The next step is for the Parliament to introduce legislation. We urge the government and all MPs to make this a priority,” Ms Levin said.

According to the Illion Accenture spend tracker online, gambling in Australia has increased dramatically over the pandemic. From a base line index of 100 in January 2020, before the pandemic, in November 2021, the index is now nearly four times higher at 384. This increase is showing up in financial counselling casework.

“Financial counsellors see a lot of harm from credit-fuelled gambling. In addition to losing savings and wages, most clients of financial counsellors have credit card debts and payday loans with crippling interest payments,” Ms Levin said.

“While Australians have not been able to use a credit card to fund gambling at in-person venues like casinos for a long time, the fact that it was still happening online was a loophole in the legislation,” said Gerard Brody, CEO of Consumer Action Law Centre.

Financial Counselling Australia, Consumer Action Law Centre and Financial Rights Legal Centre made a joint submission to the inquiry, which opened in March this year, calling for the prohibition on the use of credit cards and e-wallets for digital gambling.

The submission includes many case studies, which show how the use of credit to gamble online has devastating consequences on people, families, and the broader community.

“Consumer advocates have been working to prevent credit funded gambling online for many years. Going into an election, we urge all parties to consider their commitments to reducing gambling harm,” said Karen Cox, CEO of Financial Rights Legal Centre.

Australia has the highest per capita gambling losses in the world, which have increased during the COVID-19 pandemic.

Responsible Wagering Australia and the Australian Banking Association have both publicly supported the prohibition of credit cards as a payment method for online gambling.

Media contacts

Lauren Levin, FCA’s Director of Policy and Campaigns, 0411 050 035, [email protected]

Georgia Lenton-Williams, FCA’s Communications Advisor, 0422 707 136, [email protected]

Financial counsellors welcome new banking Financial Difficulty Guideline

Financial Counselling Australia welcomes today’s release by the banking industry of a new Financial Difficulty Guideline.

The guideline represents the continuing evolution from the banks in the way they respond to customers experiencing financial stress.

“This guideline is a really positive move from the banking sector,” said the CEO of Financial Counselling Australia, Fiona Guthrie.

“It means that bank hardship responses will be more flexible, there will be better communication and more options for people doing it tough,” Ms Guthrie said.

One key part of the guideline is the recognition of the importance of people having a savings buffer. While at this stage the commitment is only for banks to “consider” a savings buffer, it is an important start.

“A few years ago, a savings buffer was not even on the table. We expect that trials of the new approach, which are underway in some banks already, will quickly show its value.

“It has never made sense for creditors to expect a person to commit every spare cent to debt repayments, because it only sets people up to fail,” Ms Guthrie said.

The financial counselling sector also welcomes some other important elements of the guideline, including:

  • For people who are unlikely to be able to restore their financial position, a recognition that banks can still help, for example, through agreeing on an alternative arrangement, plan or contract
  • Adapting practices in times of emergencies or disasters, for example, by recognising that people may not have access to financial records immediately and that they will need time to come to terms with what has happened
  • Where a short-term solution will not help overcome the customer’s financial difficulty, but a longer-term solution may, the longer-term solution will be favoured (financial counsellors are often frustrated that the length of hardship arrangements are too short for people to actually get back on track)
  • Confirming that banks will have information on website home pages about financial difficulty. This will encourage people to seek help sooner
  • Providing clear information to people about the impact of a financial hardship variation on their credit contract, as well as on the person’s credit report
  • Proactively identifying customers experiencing financial difficulty

The new guideline also explicitly references the standard financial counsellor authorisation form. Again, this will be very welcome because when creditors reject this form it creates unnecessary barriers. Financial counsellors then need to expend time and effort to get the form accepted, when they should be representing their client and working with the creditor.

Financial Counselling Australia has also called on other sectors to develop similar guidelines.

“There are a number of elements in this new guideline that debt collectors, telcos, utilities and buy now pay later providers could usefully adopt.

“We encourage these industries to think about the overarching philosophy for the guideline, which can be summed up simply as: how can we help,” said Ms Guthrie.

For comment, please contact Maura Angle on 0418 334 121 or email [email protected].

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