Sharkwatch March 2010
- Notes & Notices
- Bushfire Insurance Claims and the Court of Public Opinion
Denis Nelthorpe
- Bob Cruickshanks Retires from ITSA
Lyn Brailey and Wayne Warburton
- The New ITSA structure
Lyn Brailey and Wayne Warburton
- 144 Lenders Sign Hardship Agreement
- The Law Matters:
Working with Aboriginal and Torres Strait Islander People
Katherine Pranic
- AFCCRA Update
Fiona Guthrie
Teleconference:
Relationship Between Creditors and Financial Counsellors: Problems and Positive Issues to Take Back
- How a $2000 Debt Can Cost Folk Who Fall on Hard Times Everything They Own
Kristen Gobbo
- Round-Up
News, views and information about financial counselling around Australia
- In the Media
Snippets of interest and information found in the media regarding issues around financial counselling
Notes & Notices
Immigration Rights Website
A number of financial counselling services in Australia have clients with immigration issues. Elizabeth Terry from Wesley Gambling Counselling Services has notified Sharkwatch of a helpful website - that of the Immigration Rights and Advice Service (a legal centre).
Their website (www.iarc.asn.au) has a lot of helpful fact sheets as well as details of their new street address, new phone number, and new arrangements for appointments.
AMEX Hardship Number
The hardship number for American Express is 1300 660 562 (thanks to Elizabeth Terry for sending this in).
Telstra Financial Hardship Policy Update: Extended SAT Hours, New Contact Numbers
The Telstra Special Assistance Team (SAT) has new extended operating hours: 7:30 am to 5:30 pm Monday to Friday, Melbourne time (not weekends and not Victorian public holidays).
Note: the SAT is a first point of contact ONLY for Financial Counsellors, dealing with Telstra credit matters. It is not a first point of contact for customers and the SAT contact numbers should not be given to clients or publicised. Please advise customers to call 13 2200 and say "I want a payment extension".
The contact numbers for the SAT are Tel: 1800 045 092 and Fax 03 8601 0288 (please note the new numbers). Please also note that verbal privacy authority messages left on the answering service by customers are not adequate for the team to take action for Financial Counsellors. Written privacy authorities should be faxed to the above number. A credit management fact sheet is available from Robert Morsillo, Telstra Consumer Affairs (Robert.J.Morsillo@team.telstra.com).
Financial assistance for this Project was provided by the New South Wales Government from the Responsible Gambling Fund. The views expressed in this publication are solely those of the authors and do not represent the views of the Responsible Gambling Fund or of the New South Wales Government.
Optus Financial Advisory Support Team
Sharkwatch has received a number of requests to provide the contact details for the Optus hardship team, the Financial Advisory Support Team (FAST).
The number is: 1300 303 509.
It should be noted that this is a financial counsellor ONLY line and should never be given direct to clients. It should also be noted that for the FAST team to speak to a financial counsellor, a prior authority needs to have been lodged or the client needs to be present. General information on the Optus Hardship Policy can be obtained from the Optus website (www.optus.com.au) by following the links from their Homepage to ‘About Optus’ to ‘Legal and Regulatory’ to ‘Regulatory’ and finally to ‘Financial Hardship Policy’.
ANZ Contact Numbers
Lynn Brailey has sent in the following updated contact numbers for the ANZ Bank and Esanda:
Personal loans and credit cards:
Ph. 1800 351 548
Fax 1800 010 057
Mortgages:
Ph. 1800 252 845
Fax 1800 462 852
Esanda:
Ph. 1800 838 100
Other Hardship Assistance Team Numbers
Citibank: 1300 662 030
Bank of Queensland credit card accounts: 1300 441 287
Suncorp credit card accounts: 1300 220 562
Wesley Community Legal Service gratefully acknowledge the sponsorship of LexisNexis, whose assistance has enabled our solicitors to have access to the Butterworths Direct Online package.
Bushfire Insurance Claims and the Court of Public Opinion
Denis Nelthorpe
Project Lawyer,
West Heidelberg Community Legal Centre
Sometimes litigation and legal argument are just not the solution to client problems. Recently, I had cause to look to the court of public opinion to find a solution to the problems of a group of bushfire residents caught in a frustrating battle with their insurer. After unsuccessful attempts to broker a solution I took the opportunity to embarrass the insurer through the media on the anniversary of the bushfires. The result was extraordinary!
The Background
Twelve months after the Victorian Bushfires on 7 February 2009, I had four outstanding matters which had remained unresolved for months despite all my best efforts to resolve the claims. Three more matters emerged after some media publicity. These cases had not progressed to internal dispute resolution, let alone the Financial Ombudsman Service (FOS). The consumers had not received written offers for re-building until the beginning of November at the earliest, some until late December, and some had not received any offer at all. Putting these disputes through FOS would have taken 6 months (assuming I had the resources to run their cases).
There was no suggestion by the insurer that the claims were deficient or would be rejected. The claims were similar in nature. Nearly all of the cases revolved around the question of how much it would cost the client to rebuild their home. The answer is a bit like “how long is a piece of string?” The answer, in a sense, will only be known after the house has been built. However, the insurance policy was for replacement of the home and therefore required an accurate estimate of the cost of rebuilding.
In these cases the insurer had arranged quotations based on a schedule of works (detailed description of the house, outbuildings and fixtures) which in many cases were described as deficient by the clients. The insurer had sought to rely on the lowest quotation obtained even where all the other quotations obtained by the consumer and the insurer had been for considerably higher amounts.
The consumers no longer had any confidence in the staff or processes of the insurer for dealing with these claims. I shared their lack of confidence. The problems included:
1. Lack of Customer Service
The insurer had no presence in Victoria and had relied on assessors for face to face contact. Consumers had to contact Sydney staff by phone, at their expense, to progress matters. The insurer had failed to progress matters and had not accepted responsibility for processing the claims in a timely manner. It was also not understood that many residents have been traumatised by the fires. The insurer had not apologised for, or even acknowledged the delays in finalising the claims.
2. Failure to Honour the Policy
The policy was for replacement of the home. Most of the consumers were concerned that the offer made to them would be insufficient to rebuild. The insurer had not sought to reassure their customers. In fact, the insurer had indicated that so long as the lowest quote met the Schedule of Works it did not have to address the question of whether the offer would be sufficient to rebuild.
3. Fairness of the Offer
In many of the cases the insurer had made an offer based on the lowest quotation even where there are several other quotations for significantly higher amounts. In some cases, the customer has disputed the schedule of works or that the lowest quote was based on the completed schedule of works. In other cases the customer has sought an explanation for the large difference ($100,000+) between the lowest quote and all other quotes. The insurer had made no attempt to satisfy these concerns.
The insurer had effectively said to these clients if you don’t like it go to FOS. Victoria Legal Aid had established the Bushfire Insurance Unit in recognition of the lack of expertise and resources available to deal with these types of cases. The Unit was wound up at the end the October 2009 when most of the work was finished, and my work secondment finished at the end of December.
It would have been very difficult for any legal aid or legal centre lawyer to process these claims through the Ombudsman during the first half of 2010.
One advantage of dealing with a NSW based organisation was its lack of sensitivity to the sentiment in Victoria on the need for fair and expedited treatment of bushfire effected residents. I made the decision to publicise the lack of progress in the cases on the anniversary of the fires. I was able to ensure that there were several pointed references to the cases on radio in the lead up to the anniversary. Christine Nixon became involved and put the Insurance Council of Australia on notice that these problems should be addressed as a matter of urgency.
By the time I went to air on radio and television news on the Monday after the anniversary, there was panic in the air! By Monday afternoon I had 8 cases and by Tuesday the insurer indicated a desire to settle all of them by Thursday. A week later six had been resolved with increased payments of $650,000 to the clients as well as an apology from the CEO. The two remaining cases I am assured will be settled and at an increased cost of at least $250,000- 300,000. All told, increases of nearly $1million.
The lesson for public interest advocacy is clear. We have to use all the weapons at our disposal including the media. The media, when used at the right time, intelligently and strategically, can be a useful tool for bringing about an outcome when other avenues are not feasible or responsive enough. Many clients do not have the wherewithal to afford legal costs and may lack the resilience and stamina that navigating the legal system to get redress can so often involve. In this case, my clients had been through enough - losing their homes and possessions. Corporate reputation is important and a serious threat to that reputation will often bring about a serious change of attitude. It’s amazing how giving voice to the injustices experienced by clients can reverse previous intransigence as appears to have occurred here. The bushfire insurance cases that I know of are now all but completed and these outcomes were a great way to finish!
About the author: Denis. Nelthorpe, B. Juris, L.L.B.
Bob Cruickshanks Retires From ITSA
For us, particularly in recent years, Bob has been the human face of ITSA. The one person we have been able to relate to, talk to and call on for help when the bankruptcy problem has been too difficult, when we just wanted to bounce ideas off him, or we wanted to double check an answer to a question.
Bob has assisted in training programmes and agency visits throughout the state. His visits were legendary. Locals would often look up in surprise to see a car pull up, surfboard on the roof and an official looking man in a suit, carrying a copy of the bankruptcy act under his arm, emerge from the car.
I remember one occasion on the Central Coast. I had a difficult situation — an elderly woman and her sons were running a failing construction business. Her husband was not officially involved in the business but was in fact the one with all the say. He was extremely aggressive. By my reckoning their family solicitor and accountant had been giving them incorrect bankruptcy advice. But - what would I know? I was only a financial counsellor! I called a meeting and invited Bob to attend. He only once raised his voice and thumped the bankruptcy act on the table. A very subdued group listened carefully to Bob, and the situation was resolved with a minimum of fuss.
Bob, we can’t tell you how much you will be missed. You will leave a huge personal and professional gap in our lives that can’t be filled. We hope you enjoy your retirement and the time you can now spend with your wife, children and grandchildren.
Betty Weule
[Eds note: The team at Sharkwatch completely agree with Betty’s sentiments. Thank you so much, Bob. You will be sorely missed!]
The New ITSA Structure
Lyn Brailey and Wayne Warburton
National Financial Counsellors’ Resource Service.
The Insolvency and Trustee Service of Australia (ITSA) has undergone a significant change in structure. A number of financial counsellors have contacted Sharkwatch asking for clarification of these changes.
ITSA is headed by the Chief Executive, who is also the Inspector-General in Bankruptcy, Ms Veronique Ingram. There is only one official receiver, Ms Giulia Inga, from Sydney. The Brisbane ITSA office is the place for all debt agreement lodgements.
In total there are five National Managers, each of whom is responsible for one of ITSA’s five business lines. The ITSA website (www.itsa.gov.au) provides information on the new structure, but here is the basic outline of each of the five sections.
1. Information & Registry (Official Receiver)
National Manager: Ms Giulia Inga – Sydney
Assistant National Manager: Mr Dipen Mitra Sydney
- Provides information to debtors on options to deal with unmanageable debt
- Assesses and registers bankruptcy and personal insolvency agreement applications from debtors and registers court ordered insolvency administrations
- Issues bankruptcy notices on the application of creditors
- Exercises statutory powers of the Official Receiver to obtain information and/or recover monies on the application of trustees administering insolvent estates
- Maintains the National Personal Insolvency Index, the public register of person
2. Debt Agreement Services
National Manager: Mr Andrew Robinson – Brisbane
Assistant National Manager: Ms Vanessa Goodey – Brisbane
- Monitors compliance of proposals with statutory requirements
- Conducts the voting process for debt agreement proposals
- Maintains accurate National Personal Insolvency Index entries in relation to debt agreements
- Works with creditors and administrators to improve standards of practice in relation to proposals
- Provides a telephone helpline service on practice relating to proposals and completion
3. Trustee Services
National Manager: Mr Adam Toma – Melbourne
Assistant National Manager: Ms Cheryl Cullen – Sydney
- Conducts preliminary enquiries that identify potential realisations, matters to be investigated for recovery of assets, and possible offences
- Ensures that all matters requiring further investigation are administered by the Official Trustee, or by a Registered Trustee
- As the Official Trustee:
- administers estates where no Registered Trustee has been appointed
- administers bankrupt estates, Personal Insolvency Agreements, and Debt Agreements where the originally appointed Registered Trustee or Debt Agreement Administrator are no longer able to do so
- controls and sells forfeited property pursuant to orders made under the Commonwealth Proceeds of Crime Acts and the Customs Act
- Acts as special trustee for government agencies pursuant to court orders
4. Regulation & Enforcement
National Manager: Mr Jeff Hanley – Melbourne
Assistant National Manager: Mr Frazer Thomson - Melbourne
- Ensures high national standards of Bankruptcy Act knowledge, practice and procedure by personal insolvency practitioners.
- Investigates alleged offences under the Bankruptcy Act and prepares briefs of evidence for prosecution by the Commonwealth Director of Public Prosecutions
- Educates debtors, clients and stakeholders to promote compliance with the Act.
5. Corporate Strategy & Support
National Manager: Mr Gavin McCosker - Canberra
Provides strategic and operational corporate support services to the Chief Executive, the National Management Board and all other business lines, including:
- development of employee policies and recruitment and pay services
- budget development and monitoring, financial operations, and procurement responsibilities
- all aspects of information and communications technology
- legal advice to ITSA staff, input into the development of personal insolvency reform (a responsibility of the Commonwealth Attorney General's Department)
- client services coordination
- certain site support functions at all of ITSA's operational sites
Site leaders
In addition to the above, each ITSA site has a site leader, who is the contact point for local stakeholders.
Currently, these are:
Adelaide - Pat Tragauer
Brisbane - Andrew Robinson
Canberra - Peter Olsen
Hobart - John Cummings
Melbourne - Adam Toma
Perth - Jerry White
Sydney - Giulia Inga
Townsville - Charmaine Howe
What does that mean for financial counsellors?
In many ways, little has changed for financial counsellors. Forms are lodged in a similar way and ITSA have assured financial counsellors that they remain committed to engaging with financial counsellors as a key stakeholder and to working cooperatively with financial counsellors.
In addition, ITSA, in their regular training sessions for financial counsellors, have answered any questions financial counsellors may have about the new structure and any practical implications. Sharkwatch would encourage any financial counsellors who have questions but have not attended ITSA training recently to attend the next training in their area if possible.
144 Lenders Sign Hardship Agreement
Last year, on June 21, the Federal Treasurer, The Hon Wayne Swan, MP, noted that all 144 retail banks, building societies and credit unions had signed up to a government principles document aimed at assisting borrowers experiencing financial difficulty as a result of the global financial crisis (GFC).
The treasurer’s press release noted that ‘this agreement means that financial institutions will be able to offer a range of options to assist mortgagees who are facing financial hardship’. These options include:
- Postponement for up to 12 months the dates on which payments are due under a mortgage contract (with interest to be capitalised into the loan);
- An extension of the period of the contract and a reduction in the amount of each payment due under the contract;
- Interest-only breaks on loan repayments; and
- Fee waivers.
The press release goes on to note that such measures will not be appropriate in every case, but also reminds consumers that there is redress should they feel a lender is not living up to these principles.
“If a borrower believes their financial institution has not lived up to the promise it has made through the Principles, they should first raise this with their financial institution's central customer complaints area, and if not satisfied with the response, they can contact their financial institutions' external dispute resolution service, through either the Financial Ombudsman Service on 1300 78 08 08 or www.fos.org.au or the Credit Ombudsman Service on 1800 138 422 or www.cosl.com.au.”
The press release also provides details of contact people at major lending institutions who can provide information about the principles and what it means for customers in financial hardship. To access the full list, check out the press release at the Treasurer’s website http://www.treasurer.gov.au/default.aspx by clicking on ‘The Hon Wayne Swan, MP’, then ‘Media Releases’, then ‘2009’ and then choosing media release number 077.
Although Australia missed the worst of the GFC, lenders are still adhering to these principles (as indeed they should!), and financial counsellors should be aware of both this agreement and methods of redress.
The Law Matters
Katherine Pranic
Solicitor
Wesley Community Legal Service
Working with Aboriginal and Torres Strait Islander People
Prior to commencing work at Wesley Mission I was fortunate to have worked for the Aboriginal Legal Service NSW / ACT (ALS) in both their Redfern and Parramatta Office for about 6 months. In my position I represented Aboriginal and Torres Strait Islander people in the criminal jurisdictions of Local Courts in NSW, including the Downing Centre, Central, Mt Druitt, Blacktown, Penrith, Bidura and Parramatta Children’s Court.
Whilst this was not my first experience with Aboriginal and Torres Strait Islander (ATSI) people as clients (I had worked in the Local Court Registry for many years as well as doing volunteer work at Redfern Legal Centre) it was the first time I really began to understand and appreciate the uniqueness of ATSI clients. To this day I still regard my clients from ALS as my most favourite to work for.
Prior to starting work at ALS I tried to prepare myself as much as possible for the challenging role of ALS Solicitor so I read as much as I could about working with Aboriginal people. Two really good resources are the NSW Equality Before the Law Bench Book chapter on Indigenous people1 which is a great legal resource and the Working With Aboriginal People and Communities practice resource by the NSW Department of Community Services2 which is a great resource for working and establishing connections in Aboriginal communities. These resources are available online and I refer to them throughout this short article.
Hardly surprising when dealing with Aboriginal and Torres Strait Islander clients is how conscious one must be of the trust issues that arise due to the abuse and past government policy that have marginalised this group of people. It can take time to build trust and rapport, so it is important to be patient and respectful in the early stages of the relationship.
Generally at ALS this relationship building was already established amongst senior members of staff and elders Generally at ALS this relationship building was already established amongst senior members of staff and elders in the community. Besides the intricate management system there were also other ways trust and relationships were strengthened, such as participating in NAIDOC days and even in community events such as the monthly Redfern ‘Family Day’.
This process of establishing contact with the community is very important if you are trying to establish a new service. By being visible to Aboriginal and Torres Strait Islander people in your community you are more likely to be approached by them and they are more likely to see what type of person you are and that you are trustworthy. This is also important as it is more likely that Aboriginal and Torres Strait Islander people will approach you in an environment they are comfortable in rather than coming into an office or building they are unfamiliar with.
One method I employed to build trust was utilising the Aboriginal Court Liaison Officer (ALCO), a person who would be the bridge between the Court Registry and the Aboriginal and Torres Strait Islander Community in that area. If they liked you they would introduce you to your clients, which would let the client know that you were trustworthy. Incidentally the ALCO’s were especially useful in locating clients who were difficult to find and would even bring them to court on occasions. Many organisations have an ALCO equivalent and they are a great contact to make.
One wonderful thing about having built trust with an Aboriginal or Torres Strait Islander client is just how open and honest they are as clients3. This was something that as a solicitor I used to really appreciate and certainly made my job much easier - having a client answer a question honestly thereby reducing the chance of surprise later during the court process.
When communicating with Aboriginal and Torres Strait Islander people one thing that is important to keep in mind is the issue of kinship4. This may not come up with every client; it seldom did for me working in the inner city, however on the occasions that I had a client from a country or rural area it would come up.
The system of kinship amongst Aboriginal and Torres Strait Islander people is a complex system that determines peoples relationship with each other, their roles, responsibilities and also their relationship with the land. This is often reflected in the way ATSI clients share information and resources with their family and extended family and the way extended family provide each other with psychological and emotional support.
Extended family is also very important to Aboriginal and Torres Strait Islander people. They place a very strong emphasis on family and it is not just immediate blood family. This family includes those related by marriage, as well as cousins, aunties, uncles and respected elders in the community.
This family support was very evident at court when working for ALS. It was often the case that a person facing court would have a strong support network around them. In fact it would also be the case that people supporting someone at court would end up supporting another person as well whom they knew from within their community5. It was lovely to see and also made my job easier.
This issue of extended family would be a very important consideration for many financial counsellors out there. You will notice that most Aboriginal and Torres Strait Islander people share their resources, including their money. This often means that even if one person is working they will often be supporting numerous other people outside their immediate family circle. One very touching example I witnessed was an occasion where many community members contributed to the funeral expenses for someone from the community.
Another issue to consider when communicating with Aboriginal and Torres Strait Islander people is that they often have their own language and communication style. Some key points here to keep in mind include:
- Silence – This is a positive communication style amongst Aboriginal people. It is often a sign that they are thinking of a response or waiting to feel more comfortable before they communicate with you.
- Non-verbal communication – things such as not making eye contact hold very different connotations amongst Anglo-Irish Australians then when compared with Indigenous people. This is especially true if your client comes from a background of having very limited contact with Anglo-Irish Australian culture. It is important to remember that it does not indicate a lack of honesty or credibility.
- Difficulty with numeracy and literacy – it is important to be mindful of this, and to be ready to provide assistance with filling out forms, reading information etc. By asking questions such as “what year school did you get to?”, or asking my ATSI client whether they would prefer me to fill out their forms was an easy way of determining their literacy without causing embarrassment. Another technique I would employ when helping a client understand a particular court process or what a particular criminal charge means would be to use very simple language, diagrams. If the client still did not understand, I would take responsibility and often tell my client “if you don’t understand then I am not explaining it properly, let me think of clearer way of communicating this to you…”. This would often lead to less frustration on for my ATSI clients and at the end of the day it really was my responsibility to explain things in a way that could be understood.
- Swearing – you will probably notice that your Aboriginal and Torres Strait Islander clients will use more swear words in their communications with you.
Bearing all these points in mind it is always important to remember not to talk down to your ATSI clients, and to accept them as they are - that is, as a very down to earth, generous and warm community who are a pleasure to work with and who are very deserving clients.
In ending I would really encourage everyone to read the chapter on Indigenous people in the NSW Equality Before the Law Bench Book and the Working With Aboriginal People and Communities practice resource by the NSW Department of Community Services. They are easy to read and offer practical advice on building better relationships and understanding with your Aboriginal and Torres Strait Islander clients.
AFCCRA Update
Fiona Guthrie
AFCCRA CEO
Financial Counselling Foundation
Applications for grants from the Financial Counselling Foundation are now open. The purpose of the Foundation is to provide grants for projects that will build the capacity of the Australian financial counselling sector, and contribute towards the sector’s long-term sustainability. The grant categories are research, education and training, policy and advocacy and the development of resources.
The minimum grant size is $5,000 and the maximum is $30,000. Applications must be received by Friday 16th April, 2010. Decisions about the award of grants are made by an independent committee.
This is the second grant round, since the Foundation was set up a few years ago.
Based on the first grant round, it is clear that the Foundation is meeting its purpose. Anna Mandoki’s report on the UK model of financial counselling and lessons for Australia is an important strategic document for the profession. We will be sending it shortly to decision makers around Australia. The mortgage repossession flowchart, produced by the Financial Counsellors Resource Project in WA is now adorning the walls of financial counsellors around Australia. And the update of the web-based resource manual for WA financial counsellors is nearing completion.
Feel free to ring or email with any questions about the application process
Child Support Agency
The Child Support Agency hotline rolled out across Australia on 22nd February. Staff in the CSA are keen to hear from you – the number is 1800 629 977.
The hotline is providing the CSA with a good understanding of the issues financial counsellors are seeing in their casework. The next step in our work with them is to develop training resources for financial counsellors. A small working party with representatives of our sector and the CSA will be set up to oversee this.
AFCCRA Conference, EDR Forum, Jan Pentland Dinner
Conferences are a chance to hear new ideas, update your professional knowledge and interact with your colleagues. The AFCCRA Conference, to be held in Melbourne this year, will be all this – and more. The conference will be Tuesday June 8th and Wednesday June 9th. Our keynote speakers include Allan Asher, Clare Martin, David Tennant and Jenny Macklin (tbc). We are also planning a number of concurrent workshops on professional development.
The External Dispute Resolution Forum, which always coincides with the AFCCRA conference, will be held on Thursday June 10th.
The Jan Pentland Foundation will be holding a dinner in honour of Jan on the Wednesday evening. The winner of the Jan Pentland Scholarship will be announced at that dinner. The scholarship will be awarded to a person to help with the costs of studying to become a financial counsellor.
ITSA
Lots is happening with ITSA. Like the CSA they want to make sure that financial counsellors are given consistent and accurate information and that they understand the type of issues we deal with. For those reasons, they are also planning to set up a hotline for financial counsellors around Australia. This is still in the early days of planning. More information will be available soon.
ITSA will provide training for financial counsellors on the changes to bankruptcy laws, once the legislation is passed. The main changes will be the introduction of a longer stay period for a debtor’s petition and an increase in the threshold for a creditor’s petition.
Diploma of Community Services (Financial Counselling)
We are in the process of updating the Learner and Assessment Guides for the financial counselling units in the Diploma to reflect the new consumer credit laws. This work is being done by Catherine Uhr, a lawyer with Legal Aid Queensland and will be completed by the end of May.
The Diploma is still relatively new and it is timely therefore to assess how effectively it has been rolled out.
Later in the year we will bring together staff from Registered Training Organisations and state financial counselling bodies to discuss a range of topics: best practice delivery, marketing, processes for ongoing updating and linkages with the accreditation requirements for state associations.
ASIC - Training on the National Credit Code
The credit team in ASIC is putting together a roadshow for financial counsellors outlining the new credit legislation. They will be delivering this training in partnership with community legal centres or legal aid agencies (depending on the state), so that financial counsellors are given a comprehensive outline of the new laws and their practical impact.
The Consumer Credit Legal Centre in NSW is putting together resources that can be used around Australia and will be the basis for the advocacy component. We hope there will be funding to enable rural and regional counsellors to attend.
Bankruptcy Email Discussion List
A number of people from around Australia were recently involved in a large phone conference with ITSA to talk about the new statement of affairs to accompany the Declaration of Intent to Lodge a Debtor’s Petition. To facilitate that discussion, we set up an email list – bankruptcy@afccra.org.
The email has been a useful way to stay in touch about various issues surrounding bankruptcy, for example, to share information about the lobbying on the bankruptcy legislation and other reforms. As a good example, there was a recent article in the Financial Review about problems with debt agreement administrators, that we posted to the list. There is a quote in that article that is well worth sharing from the Debt Agreement Practitioner’s Association:
‘The submissions to the Senate Inquiry, made by financial counsellors, are totally rejected by DAPA and are perceived to be no more than the mutterings of organisations endeavouring to undermine a very viable system.’
So there you go! The whole debt agreement system is to be reviewed later in the year - we are really looking forward to making a submission.
If you’re interested in being included on the email list, let me know and I will add you in. You won’t be inundated with emails, but you’ll get the odd one or two.
Campaigns – Positive Credit Reporting
Credit reports are now going to include a lot more information: type of accounts held, when opened, limits and repayment history (including the number of repayment cycles an individual was in arrears in the past two years). This last piece of information is the most problematic, with details still being worked out. Thank you to Jennifer Gracie who attended a consultation on the implementation of credit reporting recently (for example, does being late with a payment by one day constitute being in arrears?). Information about repayment behaviour will start being collected about all of us from 1 April.
Campaigns – Funding for Consumer Credit Legal Services
Consumer organisations, including AFCCRA, welcomed the transfer of credit regulation from the states to the Commonwealth. One of the downsides however has been uncertainty about continued funding for state-based consumer credit legal services, which are funded by state governments. This is obviously a critical issue for financial counsellors. We need these services to continue and to expand – for example South Australia does not have a consumer legal service at all.
Gordon Renouf is undertaking a project for ASIC documenting the likely demand for legal services, once credit transfers from the states to the Commonwealth. He will be in touch with financial counsellors at some point soon – either asking us to complete a survey and/or he may interview some people directly. Please help with this work as it will be really important in arguing that the Federal Government needs to fund consumer credit lawyers.
Campaigns – Interest Rate Caps
“Save the Cap” – this is the theme of the consumer movement campaign focusing on interest rate caps. If you live in Queensland, the ACT or New South Wales a lender cannot give you a loan with an interest rate higher than 48% (where the interest rate also includes fees and charges). The Federal Government is considering whether an interest rate cap of 48% should be included in the second round of reforms for the national credit laws. We say ‘yes’. The government is undecided. An interest rate cap would stop many fringe lenders, including payday lenders, from providing high cost credit to people who are already in financial difficulty. All that usually does is leave people worse off. The solution to financial hardship is not a loan at 1,000% per annum.
Questions or Comments
Fiona Guthrie - fiona.guthrie@afccra.org
Teleconference: Dec. 9, 2009
Relationship between creditors and financial counsellors:
Problems and positive issues to take back
Following is a brief account of the discussion at the above teleconference, which, broadly speaking, centred on the issue of the relationship between financial counsellors and creditors. We reproduce it here in Sharkwatch, as the issues that were discussed are likely to be of interest to our readers.
Participants: Katie Barrett (VIC), Lyn Brailey (NSW), Denise Brown (NSW), Noel Duffin (NSW), Jennifer Gracie (NSW). Fiona Hawkins (QLD), John Mumford (VIC), John Russell (VIC), and Maxine Wright (NSW).
The teleconference began with a discussion of the relationship between financial counsellors and banks. Lyn explained that as a member of the Creditors’ Liaison Committee for NSW and also as the NSW AFCCRA representative, she has visited the major banks in recent times. They have all expressed a desire to have better relationships with both financial counsellors and their own customers. The big four banks have Hardship processes in place and on the whole, these are working well. They are also bringing in dedicated financial counselling contacts.
John Mumford expressed a concern that some banks have about a two month delay before making decisions and this can be difficult for clients who are trying to come to some arrangements about their debts.
Noel said that he is also getting a good response from the GE Hardship Team and the financial counselling direct contacts.
A number of participants spoke about difficulties with other creditors, particularly some collection agencies who expect financial counsellors to put their requests in writing, but who will not put their reply in writing.
Fiona said that she sometimes waits for several months for a response from a Hardship Team and then all they are prepared to discuss is a repayment plan. They appear to not have read the request from her clients for any other kind of option.
Noel said that he finds email contact is working well with some creditors and responses are coming through more quickly.
Everyone agreed that mentioning escalation to the various Ombudsman Schemes will generally bring on a
speedier response. However, while that is a good result for us, the concern is that the general public are much less aware of the Ombudsman Schemes.
Participants noted the importance of AFCCRA maintaining a current creditors liaison list on their website (www.afccra.org).
Participants also discussed whether financial counsellors are becoming collection agencies for utility companies.
There was considerable discussion on this subject and the general consensus was that, to some degree, we are. However, as most of the energy companies now have Hardship Teams in NSW and VIC, if the client can be referred to the Hardship Team, realistic arrangements can be made.
All participants spoke about the problems with escalating energy costs for clients. The problem for clients on Centrelink who are spending up to ¾ of their income on rent and who often have old and energy inefficient items is something that we have no answer for. Even when Centrepay is in place, the clients often have to cancel them because there is not enough money for food and other living expenses if they are paying for rent and energy costs. This is a problem that is only going to increase for our clients as increases in energy expenses climb over the next few years. For example, after a recent IPART decision. electricity costs in NSW are expected to rise by as much as 64% over the next 3 years.
Lyn and Jennifer discussed a number of proposed improvements to the National Financial Counsellors’ Resource Service over the next 12 months, such as providing tentative dates for teleconferences for the whole of 2010.
Fiona asked if everyone could be notified of outcomes when we have had meetings with the creditors and Lyn agreed to do this.
Jennifer also mentioned information emails that are being sent out as information comes up and the participants agreed that these were useful to them.
Fiona said that she had received a number of calls after Jennifer’s appearance on the Sunrise program mid-year and she is also seeing clients who said that they had seen the show but were only seeking assistance in recent times. This was the first time they became aware of financial counselling availability.
Maxine asked if there was a specific media policy and Jennifer suggested that everyone check with their own agency’s policies regarding media approaches. It can be particularly useful in regional areas where the local newspaper, radio and television may be looking for
local content. [Eds note: see the Denis Nelthorpe story on using media to our advantage on pages 4-5, this issue].
Fiona is providing a 15 minute talk to the local community radio every month with a topic of general interest on budgeting and credit and debt matters. It was recommended that everyone seek an opportunity, particularly in regional areas, to take similar action.
Jennifer Gracie
How a $2000 Debt Can Cost Folk Who Fall on Hard Times Everything They Own
Kristen Gobbo
From The Age, March 2, 2010
FINANCIAL counsellors help people - without charge - who have trouble dealing with credit facilities and debt, among other things. Increasingly, financial counsellors are helping clients who are being bankrupted, or are threatened with bankruptcy, by unscrupulous creditors and their representatives for amounts as low as $2000. The debt often starts as an amount much lower, but with fees and costs it grows to more than $2000 and the debtor is then at risk of bankruptcy.
The Senate is considering increasing the amount for which a person can be bankrupted by creditors from $2000 to $10,000, so it's little wonder that this has resulted in complaints from the credit and debt collection industry. Roger Mendelson, for debt collection company Prushka Fast Debt Recovery, has been in the papers recently admitting that it's important that his company is able to "threaten" debtors with bankruptcy. The reality is that the Bankruptcy Act was never intended to be used as a threatening collections tool.
Where a debtor does not have any assets, which is often a reality for financial counselling clients, the creditor will never be able to recover the debt, yet bankruptcy is still pursued, with debt collectors, lawyers and bankruptcy trustees all collecting handsome fees in this fruitless pursuit.
The real victims of bankruptcy are not the creditors who can't recover the debt, it is people who have fallen on hard times, due to no fault of their own, that suffer the most. Financial counselling clients like ''Sally'', who bought a $700 alarm system, have suffered under the current imbalance of the bankruptcy system.
Sally owns her home but is intellectually disabled and relies solely on a disability support pension. Due to her disability, Sally couldn't comprehend the nature of the debt or subsequent legal action and was bankrupted, losing her home in the process. The original amount of the debt climbed to more than the $2000 threshold with interest and late fees. With the inclusion of legal costs and trustees' fees, the final debt was $30,000.
In another case, ''Stella'' incurred a credit card debt of $2100 while receiving a disability support pension. Despite falling behind in her payments, the bank never sought to make any contact with Stella, preferring to simply outsource the debt to a debt collector. Stella was unable to make a payment arrangement that was satisfactory to the debt collector, so it bankrupted her. Her final debt ballooned to more than $32,000.
There is no shortage of cases like these, and these are just two examples of how the bankruptcy law fails to protect against those that insist on using the Bankruptcy Act as a collections device, rather than considering individual circumstances.
Those in the debt collection industry would have us believe that they will be unable to collect debt without it, which is untrue. But this may simply mean that their clients (often big banks) will be made to consider their lending decisions more responsibly instead of relying on the law to let them take houses away from people.
Sadly for the debt collectors, the lawyers and the trustees, they may have to live without their huge fees for $2000 debts.
Kristen Gobbo is a policy officer with the Financial and Consumer Rights Council.
Footnotes
1.
http://www.judcom.nsw.gov.au/publications/benchbks/equality/index.html
2.
http://www,community.nsw.gov.au/docswr/_assets/main/documents/working_with_aboriginal.pdf
3.
This is very much a contrast to my current work with problem gamblers where there is often such a pattern of secrecy, shame, and deceit such that it often takes a more rigorous interview technique to get the ‘whole’ story from my client, which frankly can be somewhat frustrating when all you are trying to do is ‘help’ them.
4.
Kinship is an intricate area of Aboriginal culture and defines how their social organisation and families relate to each other. Two very helpful websites that give some information about this are: http://www.clc.org.au/People_Culture/kinship/kinship.html and http://www.workingwithatsi.info/content/PI_family.htm.
5.
This is in contrast with what I am finding in my current role supporting problem gamblers at court. It is often the case that they experience a great deal of shame, and combined with their secretive nature, that many do not even tell those closest to them. My Principal Solicitor has even told me of a former client of his who was sentenced to a full time custodial penalty and to this day her family are unaware that she is in a correctional centre.
Round Up
NSW
Jackgreen suspended
Jackgreen (electricity retailer) was suspended on 18 December 2009. All Jackgreen customers’ accounts were then transferred to the local electricity supplier to ensure continuity of supply. The Energy Division of the NSW Department of Industry and Investment has provided information on their website to assist Jackgreen customers with their enquiries. This information is located at: http://wwwidustry.nsw.gov.au/energy/customers/supplier/retailer-last-resort/info-jackgreen.
Victoria
Australian Government funds financial counselling services in Victoria
In a joint press release with The Hon Tony Robinson MP, Victorian Minister for Consumer Affairs, and Mike Symon MP, Member for Deakin, the Minister for Families, Housing, Community Services and Indigenous Affairs (FaCHSIA), the Hon Jenny Macklin MP, announced on March 3 that the Commonwealth Government would step in to provide funding for 11 financial counselling positions in Victoria for 2010-2011, at a cost of ~$1million.
| Location | Agency | Pos. |
| North & West Metro - Werribee & Preston | Anglicare Victoria | 2 |
| Eastern Metro - Ringwood | Eastern Access Community Health | 2 |
| Gippsland - Morwell | Anglicare Victoria | 1 |
| Southern Metro - Cranbourne | Southern Health | 2 |
| Barwon-South Western - Warrnambool | Community Connections | 1 |
| Grampians - Ballarat | Child & Family Services Ballarat | 1 |
| Loddon Mallee - Bendigo | St Lukes Anglicare | 1 |
| Hume - Shepparton | Goulburn Valley Community Health Service | 1 |
News, views and information on what’s happening in financial counselling around Australia.
These positions were originally funded by the Victorian Government in response to the global economic crisis, to target Victorians who had experienced, or were facing, job loss or reduced working hours.
The locations of the services, their auspicing bodies, and the number of positions, are reproduced in the table opposite.
The Commonwealth funding for these positions is part of the Australian Government's announcement of an additional $12 million over two years for community and local government organisations to continue delivering financial counselling services around the country.
In 2009-10 the Australian Government is providing around $11.7 million to 90 organisations across Australia to deliver Commonwealth Financial Counselling (CFC) services (of which the National Financial Counsellors’ Resource Service, the producers of Sharkwatch, are one).
The funding of these 11 positions, many of which are in rural and regional Victoria, is of course, fabulous news for both financial counsellors and the financially disadvantaged in Victoria.
2010 Financial Counselling Conferences
SAFCA (South Australia)
SAFCA have an biennial annual conference in late September, alternating each year with a Professional Development Day at roughly the same time. This year SAFCA will run a Professional Development Day.
Date: Monday September 20th.
Email: secretary@safca.info
FCAN (NSW)
This year FCAN break with their usual tradition of having their annual conference in May, and move to early August. This year, also, FCAN are using a new venue, the Swiss Grand at Bondi. This conference is also dearer than previous FCAN conferences at $450 (shared room) for members and $600 for non-members, but represents pretty good value given that for this you get 3 nights accommodation at the Swiss Grand, registration, a cocktail party (Sunday), morning and afternoon teas, a restaurant dinner on the Monday night and the conference dinner and entertainment on the Tuesday night. Registration forms need to be sent by May 30.
Theme: Credit: A love affair
Dates: August 1-4, 2010.
Phone: 1300 914 408
Email: admin@fcan.com.au
FCRC (Victoria)
Theme to be announced but the location sounds fantastic.
Dates: September 6-7
Venue: Silverwater Resort (Phillip Island)
Phone: 03 9663 2000
Email: admin@fcrc.org.au
FCAWA (Western Australia)
Another spring annual conference!
Dates: October 18-22
Phone: 08 9325 1617
Email: info@financialcounsellors.org
In the Media
Cat gets bank credit approval
Original story by Kate Jones
MESSIAH Campbell was considered a good enough credit risk to be given a card with a $4200 limit – which was surprising considering he's a cat.
His Melbourne owner Katherine Campbell wanted to test the limits of her bank's identity screening process and applied for the Visa credit card on Messiah's behalf.
She was amazed when it was approved.
"I just couldn't believe it," she said yesterday. "People need to be aware of this and banks need to have better security."
Ms Campbell applied for Messiah's credit card through the Bank of Queensland two weeks ago.
She already had a credit card with the bank and wanted to see whether a second card for the same account would be approved for Messiah.
She filled out an additional credit card application form in Messiah's name, including his address and age, and sent it to the bank.
Ms Campbell said the bank requested identification from Messiah but days later sent him a credit card without receiving any proof of identification.
Ms Campbell said the envelope containing her cat's credit card, the letter inside and the credit card itself were all addressed to Messiah Campbell.
To make matters worse, Ms Campbell – as the primary credit card holder – said she was not notified that a secondary credit card attached to her account had been issued.
Ms Campbell said she was shocked by how simple it was to bluff the bank's security system.
"It's a bit scary and it's a big problem," she said. "It was very easy to do and I'm not even a professional crook."
A Bank of Queensland spokeswoman said the credit card had been issued to the cat in error.
"We have investigated the issue and it appears the bank has made an error," she said. "We apologise as this should not have happened."
Although the bank will not be taking legal action against Ms Campbell, the spokeswoman said the person signing the application form should not give misleading or fraudulent information.
"It is also important to remember that for an application to be approved, the customer must sign to confirm the information they have given is true and is not misleading or fraudulent," she said.
Messiah's credit card has since been cancelled but his credit status doesn't stop there.
Ms Campbell again challenged security measures when she applied for her cat to be a secondary account holder on her electricity bill.
The ploy worked and Messiah's name was added to Ms Campbell's Red Energy electricity bills.
A Red Energy spokeswoman said no responsibility rested with the secondary card holder and there was no problem with having a pet's name on a customer's electricity bill.
"We never intended for people to sign up their pets as secondary account holders but we respect our customers' wishes," she said. "However, we doubt that their pets will be able to take full advantage of the service."
Courier Mail, January 3, 2010
Australians cannot account for 1/3 of cash spent
This article notes a recent finding by VISA that on average, Australians can’t account for 1/3 of their cash spent. While women tended to lose track of cash for shopping, men lost track of cash for socializing.
Brisbane Times, January 12, 2010
