Financial counselling looks likely to be ramped up in Australia after the release of a new report from a review into the practice of supporting vulnerable persons.
The review came after commissioner Kenneth Hayne had referred to the importance of financial counselling services in the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
It had led the government to commit to “additional actions to improve the financial outcomes of Australians”, which included undertaking an immediate review of the coordination and funding of financial counselling services.
First handed to the government in March, before its release to the public today, 3 October 2019, the foreword from Louise Sylvan AM said “the work undertaken by financial counsellors is widely admired and widely valued”.
She said that while funding presents “the largest impediment to financial counselling accessibility, a number of challenges require more than just an increase in funding”.
The independent reviewer has flagged a need for strategic thinking in the sector, as well as a need for an independent body to be established to address current challenges and foster future development of the financial counselling sector.
Her recommendations included:
- The convening of state, territory and commonwealth governments to develop a national approach for financial counselling
- Maintenance of financial counselling funding that already occurs
- Additional funding to be taken from industry sources that will enable access to financial counselling services to be doubled over the next four years
- A “ramp up” of financial counselling services to occur through industry contributions to the value of $20 million from the four major commercial banks
- The inclusion of financial counselling services as a standard part of the response to people affected by natural disasters
Government response
Minister for Families and Social Services Anne Ruston said the government accepts the aims of the recommendations from the final report and will work with the sector and broader industry to consider to develop the government response.
“The financial counselling sector provides face-to-face help for 125,000 people every year and demand is growing as Australians are faced with an increasingly complex suite of financial products,” the Minister said.
“The Morrison government understands how important it is for the financial counselling sector to be well positioned to support Australians in need of financial advice and advocacy.”
The banks’ response
The Australian Banking Association (ABA) has also responded to the news, commenting that it is “pleased to see the report has reinforced a number of important issues identified by banks in their submission such as better coordination of resources across the sector, a central body to allocate funding and long-term funding certainty for financial counselling”.
ABA CEO Anna Bligh has highlighted the importance of financial counsellors to all Australians, as well as the banking industry, which sees the counsellors as “valuable partners in helping vulnerable customers”.
“Financial counsellors get people back on track when they’re experiencing some of the most difficult moments in their lives and provide a valuable education service to people with lower levels of financial literacy and capability,” Ms Bligh said.
She commented that the review “charts an important path forward to strengthen Australia’s financial counselling sector”.
“Certainty of funding for financial counsellors is a top priority and the industry will work with the government to finalise a model as quickly as possible to appropriately fund the sector,” she outlined.
“As outlined in their submission to this review, banks support industry funding sourced from both the financial sector and other industries that may contribute to financial hardship.”
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