One of our goals is to campaign for legislative and policy reform in financial and other consumer markets. This reflects the long-standing commitment of financial counsellors to fixing system-wide problems they come across in their casework. To achieve this FCA:
- sets clear policy, advocacy and campaign goals; and
- works cooperatively with industry, regulators and government around issues affecting people who are on low incomes or in vulnerable circumstances.
We work across a range of policy areas including credit laws, gambling, bankruptcy, consumer law and dispute resolution. There is more information about some of our policy and advocacy work below.
FCA is represented on a number of consultative fora:
- ASIC Consumer Advisory Panel
- ACCC Consumer Consultative Committee
- Australian Banking Association Consumer Outcomes Group
We continue to meet with banks, utilities, telcos, insurance companies and debt collectors to discuss their responses to people experiencing financial hardship.
The “Rank the Banks” surveys, conducted in 2013, 2015 and 2017, have had a significant impact on bank hardship practices. These reports are based on national surveys of financial counsellors. The Financial and Consumer Rights Council pioneered this approach with the first “Rank the Banks” survey in 2012. FCRC has subsequently conducted similar surveys of Victorian financial counsellors, ranking the performance of energy retailers and telecommunications companies. Financial counsellors are well placed to report these experiences as they interact with these providers regularly while advocating for their clients.
We also provide policy input to state and national regulators, including ASIC and the ACCC, as well as ombudsmen schemes and Centrelink.
FCA campaigns strongly for legislative reform in the gambling sector. Our goal is to reduce the harm caused by problem gambling and shape government policy and community debate.
Gambling is a huge problem for some Australians and current regulation is inadequate. Problem gambling leads to financial stress and can be devastating for families and relationships. Our work with problem gamblers means we have the knowledge to investigate and report on problem gambling and advocate for change.
Unexpected expenses are a fact of life. A savings buffer helps people build financial resilience, allowing them to manage unforeseen costs. Without this buffer, people are at higher risk of financial stress and hardship and may be forced into using unaffordable credit.
In particular, we are really concerned that when people experience financial hardship, creditors expect them to put every last cent toward their debts. But unexpected expenses will inevitably occur and this approach is actually counterproductive. As a rule of thumb, we believe a savings buffer of 10% of income or $20 per month would go a long way to helping people manage life’s financial ups and downs.
It is perplexing that when someone applies for credit, standard income and expenditure statements don’t include a savings category. This sends exactly the wrong message. A savings category/buffer would help people meet unexpected expenses without falling behind on their repayments.
We also recognise that some people in financial hardship have no spare income. Financial institutions could still assist this group of people by providing incentive schemes, so that if debt repayments are met, the debt reduces by the agreed amount, and a portion of the repayment is put toward a savings account. This policy is outlined in our publication Everyone Needs a Savings Buffer.
Australia’s credit laws require credit providers to lend responsibly. In our view, the inclusion of a savings buffer in assessing a person’s capacity to repay a loan is a fundamental component of responsible lending.
We are continuing our exposé into the payday lending industry (small amount credit contracts or fast loans) and the misery that short-term, high cost loans can cause for people on low or variable incomes or who have unexpected expenses. High cost, predatory loans trap people in a cycle of debt.
Consumer leases, also known as rent-to-buy contracts, are another form of high cost credit that often cause harm.
In addition to advocating for regulatory reform of payday lending and rent-to-buy laws, we encourage greater access and promotion of different options, including the No Interest Loan Scheme.
Centrepay is a free bill-paying service for people who receive a Centrelink benefit. Payments for bills, such as rent, are deducted from Centrelink payments with the remaining funds credited to a person’s bank account.
Unfortunately Centrepay has moved away from its original purpose of being for essential items, such as rent and utilities, and was opened up to all sorts of businesses. The most concerning are consumer lease providers. Consumer leases are a form of high cost credit used to obtain household and other goods. However, the goods end up costing between three and five times the retail price, with interest rates in the hundreds of percent.
As one financial counsellor said, “There is no point in getting a consumer lease to buy a fridge if there is no money for the electricity.”
We want to see consumer lease providers removed from Centrepay. This would force these providers to lend more responsibly.
Financial institutions can also play a role by supporting the expansion of the No Interest Loan Scheme and offering low interest rate loans.