News

Small businesses affected by current lockdown measures in Victoria can access free help from small business financial counsellors.

Specialist small business financial counsellors help people to understand business debts and the implications of personal guarantees, as well as connect business owners with supports and grants that may be available.

They can also provide information about closing a business (including insolvency options) and give advice about other business matters, such as insurance claims.

“Lockdowns have an enormous effect on business and daily life. Many Victorian small business owners will be hit hard by this, so it’s important for them to know how to access support from financial counsellors,” said Dr Sandy Ross, Executive Officer of Financial Counselling Victoria.

Small businesses in Victoria can contact the Small Business Debt Helpline (a national service), or the Victorian Government’s Partners in Wellbeing – Small Business Support for free, confidential and independent advice.

Financial counsellors from across Australia have today welcomed a new Westpac policy, which will see hardship customers offered the option of building a savings buffer.

Some of Westpac’s customers will be able to reduce their home loan repayments, giving them some financial breathing space.

The bank aims to work with customers experiencing financial hardship to build a savings buffer of at least $100 a month.

What will it take before the telecommunications industry accepts that there are systemic problems with the way they sell and market their products?

There is yet another example today, with the release by the Telecommunications Industry Ombudsman (TIO) of its latest systemic issues report. The report documents poor sales practices, hidden costs and unclear information.

These findings reinforce those in FCA’s survey of financial counsellors, released just last month (April 2021). Financial counsellors said that:

• Overall, telco hardship practices are poor
• Mis-selling is common throughout the industry, with around 80% of the financial counsellors who responded to the survey saying they have clients with debts where mis-selling has occurred
• Affordability checks are inadequate, which places people under financial stress

Financial Counselling Australia’s CEO, Fiona Guthrie, said that it is very clear that the telecommunications industry drives demand for financial counselling.

The telecommunications industry has been supportive in principle of an industry funding model for financial counselling but has called for more data.

Here is yet another piece.

“Financial counsellors are at the frontline, helping people who are struggling financially. We’ve been telling the telco industry about some of their poor practices for a long time. It’s time for them to fix the problems”, said Ms Guthrie.

The TIO report also follows last week’s Federal Court decision, which saw Telstra fined $50 million plus costs for unconscionable conduct involving mis-selling to Aboriginal and Torres Strait Islander people in remote communities.

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.

Today’s $50 million fine against Telstra for unconscionable conduct sends a clear message to the industry that mis-selling will not be tolerated.

The ACCC began investigating allegations of unconscionable conduct by Telstra after financial counsellors approached the regulator with 100 examples of Indigenous people from across the Northern Territory, South Australia and Western Australia being mis-sold telco products.

More than 650 people have registered for Financial Counselling Australia’s (FCA) annual conference, Monday May 17 – Friday May 21.

Around 60 of these registrations are for the virtual ‘zoom me in’ version of the conference, which allows attendees to participate remotely via video streaming technology, while the remaining attendees will visit the conference in person at Darwin.

This is a remarkable outcome, as last year’s conference was cancelled due to the COVID-19 pandemic and subsequent travel restrictions throughout Australia.

“Earlier this year, we didn’t know if we’d be able to get this event off the ground. Despite our sense of optimism, at times things seemed unpredictable with travel restrictions,” said Fiona Guthrie, the CEO of FCA.

“We couldn’t have secured more than 650 registrations without the support and enthusiasm of everyone involved – we’re extremely grateful for that,” said Ms Guthrie.

In collaboration with the Northern Territory government, FCA has implemented a comprehensive health safety plan to mitigate any risks associated with the pandemic.

“We’re determined that our 2021 conference will go ahead. In fact, we’ve planned meticulously to make it happen. It’s great that COVID-19 case numbers are low enough now that we can travel interstate.

“Financial counsellors and capability workers, community lawyers, financial regulators, industry representatives and many others will travel from far and wide to sunny Darwin,” said Ms Guthrie.

Conference attendees are encouraged to explore the Northern Territory and to support local businesses.

“We had feedback from Darwin-based financial counsellors that the end of JobKeeper and reduction of JobSeeker has hit some small businesses hard. We want to support the local economy.

The National Debt Helpline has launched a campaign encouraging people in financial stress to contact a free and confidential financial counsellor.

The launch of the campaign follows the end of the various financial support arrangements put in place by Government and industry during the pandemic.

The JobKeeper and JobSeeker supplements finished at the end of March, meaning that many Australians now have less money to make ends meet.

Other financial support is also tapering or has ended. These supports include standard loan deferrals from banks, rental moratorium arrangements and protection from energy disconnection.

“The next few months are going to be tough and worrying for many people. We want them to know there is free assistance available through the National Debt Helpline,” said Fiona Guthrie, CEO of Financial Counselling Australia.

“The time to act is now. Don’t wait for your bills and debts to spiral out of control. We care, we can help, and we are free,” she said.

The awareness campaign involves sponsored social media content, posters and short videos in medical clinics across the country, and advertisements on taxis and buses.

The National Debt Helpline is a not-for-profit service that helps people in Australia tackle their debt problems.

Its website has helpful guides on how to deal with bills and debt and there is a helpline on 1800 007 007, which is staffed by professional financial counsellors who provide a independent and confidential service.

Financial counsellors can advise people about how to get through the next few months. For example, by providing guidance about accessing hardship arrangements with lenders and utility providers.

“Financial counsellors are trained to deal with people in financial stress. We help people who are worried about their debt and bills to get back on track financially,” Ms Guthrie said.

“We’re also warning people to be wary of services offering to negotiate your debts or fix your credit report for a fee.

“These services do not always act in the best interests of the people they purport to help. They can cost thousands of dollars, for not much in return,” Ms Guthrie said.

National Debt Helpline vehicle advertisements:

For more information call Maura Angle on 0418 334 121 or email [email protected]

Financial Counselling Australia (FCA) is reminding individuals and small business owners who have been affected by the floods in NSW and Queensland that they have access to free financial counselling.

“Financial counsellors play a vital role in helping people respond, rebuild and recover from natural disasters like flood,” said Helen Davis, the General Manager of the Small Business Financial Counselling Support Line.

Financial counsellors support people by providing free, confidential and independent advice.

“We want flood victims to know there are two helpful services they can access for free. The National Debt Helpline for individuals in financial stress and the Small Business Financial Counselling Support Line, for small business owners,” Ms Davis said.

Financial counsellors provide advice and assistance on a wide range of financial matters including:

• Disputes with insurance companies, the pros and cons of cash settlements
• Difficulties paying mortgages, rent or utility bills
• Negotiating with banks and other credit providers
• Assistance accessing government grants
• Accessing Centrelink payments

It’s important to note that financial counsellors are not planners or advisors. They don’t provide investment advice nor are they lenders.

“These floods are having an enormous impact on the communities affected. These people now have to rebuild and recover and it’s important for them to know financial counsellors are here to help as much as possible,” said Ms Davis.

Anyone struggling financially due to the floods can contact the National Debt Helpline on 1800 007 007 or visit ndh.org.au. Small business owners can call the Small Business Financial Counselling support line on 1800 413 828 or visit smallbusinessbushfire.org.au.

Media Contact

Maura Angle, Director of Community Engagement: 0418 334 121 or email [email protected]

Consumer groups have united to call for Federal Government regulation of buy now pay later (BNPL) services to protect consumers and put all credit providers on a level playing field.

Today the Australian Finance Industry Association released a self-regulatory code of conduct for BNPL providers. While it’s positive to see the industry introduce a code with contractually enforceable commitments, it is not a substitute for adequate regulation by Government under Australia’s credit laws.

BNPL is credit and should be regulated like other credit products.

Organisations at the coal face of consumer complaints and hardship – Financial Rights Legal Centre, Financial Counselling Australia, Consumer Action Legal Centre and CHOICE – are calling on the Government to follow the lead of the United Kingdom which just last month announced it would regulate the BNPL industry.

Consumer groups see the harm BNPL services cause first-hand. This includes an increasing number of people who end up in unaffordable debt through using them, poor industry hardship practices and excessive late fees.

While the promise of BNPL is that they do not charge interest, for some people the cost of late fees or account keeping fees can be just as expensive as a credit card. BNPL providers also charge a fee to retailers of between 3% – 6%. These costs will be passed on to all consumers.

A 2020 report by the Australian Securities and Investment Commission (ASIC) found that one in five people had missed payments on their BNPL debts. Worryingly, one in five people had also gone without essential items, such as food, in order to make a payment.

It also found 55% of users had at least two BNPL contracts on the go at once.

BNPL services are not currently required to hold a credit licence[1] and are not subject to consumer protections under the National Consumer Credit Protection Act 2009, despite the fact that some of these services loan large amounts up to $30,000.

This means that ASIC cannot take compliance and enforcement action for breach of lending standards by BNPL providers. The code only requires BNPL providers to assess if a borrower can make the first payment – there is no requirement to assess whether the subsequent payments are affordable.

[1] Comm Bank offers a BNPL product through a partnership with international BNPL provider Klarna and therefore has a credit licence. Klarna is not part of this code.

Quotes attributable to Financial Rights Legal Centre Chief Executive Officer Karen Cox:

These services are growing at a breathtaking rate, and ASIC’s research has shown that at least one in five consumers are missing payments. As this industry continues to grow, we will see increased debts and increased financial hardship.

Sadly, many people including Aboriginal and Torres Strait Islander people who are lured into BNPL are becoming embroiled in unsustainable, long-term debt. BNPL companies use a simple but seductive psychological trick to attract customers. Spreading out the cost of an item makes it feel less expensive, but that doesn’t mean you can afford it.

Right now, there is no obligation for BNPL providers to assess a person’s ability to repay debt or handle a consumer’s complaint fairly. We are glad to see the new Code requires membership in AFCA, but that is no replacement for proper regulation.

Quotes attributable to Financial Counselling Australia Chief Executive Officer Fiona Guthrie:

BNPL providers run a mile at the mention of the word “credit”, telling their customers the service is all about better budgeting. What they tell retailers however is much closer to the truth – that BNPL encourages people to spend more.

What BNPL providers are really doing is turning a loophole in the law into a gaping hole. It is worth remembering that BNPL is available from just a few hundred dollars to $30,000 and the code contemplates even higher amounts.

If it looks like a duck and quacks like a duck, it is a duck. We should ditch ideology and recognise that BNPL is credit and should be regulated like other credit. If we fail to act, more and more Australians will be harmed.

Take Susan*, a client of a financial counsellor who was spending 40% of her income
on BNPL debts and didn’t have enough money left for day to day living expenses, including rent. Or John, a pensioner with early signs of dementia who was signed up to $14,000 of dodgy solar panels using BNPL when a salesman called at his home.

Quotes attributable to Consumer Action Law Centre Chief Executive Officer Gerard Brody:

The Financial Services Royal Commission Final Report identified the limits of self-regulation including inadequate standards, lack of compliance, weak monitoring and enforcement and no consequences for breaches. Too often self-regulation is just a fig leaf – while there are some standards, unfortunately this code does not require every BNPL loan to be suitable and affordable for the individual customer.

So-called innovation in the financial services sector is too often focused on exploiting regulatory loopholes. Innovation that benefits the community should be able to comply with consumer protection laws to enhance people’s financial wellbeing.

The unregulated BNPL market has grown substantially in the last few years, including substantial growth during 2020. There is no doubt that this unrestrained growth poses potential harms to consumers and it needs to be brought within regulation to both protect consumers and ensure it is sustainable.

Quotes attributable to CHOICE, Director of Campaigns and Communications, Erin Turner:

Self-regulation of the Buy Now, Pay Later sector will not be enough to fix the issues we’re seeing like high fees, inappropriate lending and pushy marketing of debt to Australians.

The Buy Now Pay Later sector is now selling debt for dental treatments, solar panels and other large purchases. It is credit in everything but name so the consumer protection laws for credit should apply in full, not a weak industry code.

The Code will see businesses that fail to comply with basic standards face “naming and shaming” rather than the penalties or legal action other lenders face for significant breaches of consumer credit protections. This sets an inappropriately low bar for a growing industry.

Media contacts:

For an interview with Fiona Guthrie at Financial Counselling Australia, contact Maura Angle on 0418 334 121 or email [email protected]

For an interview with Erin Turner at CHOICE, contact 0430 172 669

For an interview with Karen Cox at Financial Rights, contact Marianna Papadakis 0414 729 006

For an interview with Gerard Brody at Consumer Action, contact Mark Pearce on 0413 299 567 or email [email protected]