NOTES & NOTICES
Upcoming Conferences ...
Queensland
The Financial Counsellor’s Association of Queensland (FCAQ) will hold its annual conference from Monday March the 10th to Tuesday March the 11th. The theme is ‘Living in a Material World’, and there will be sessions on the new bankruptcy legislation, vehicle repossession, residential eviction disputes and family law and superannuation, as well as an update on consumer law. Keynote speakers will cover such topics as ’Meeting Generation Y’, ‘Credit Can be Good’, and ‘Living in a Material World’. There will also be a public debate about the advantages and disadvantages of living in a material world involving a panel of guest speakers and ‘other identities’
For further details, contact the conference convenors: Gregory Mowle on (07) 3250 1940 or Margaret Harman on (07) 3369 3954.
New South Wales
The NSW Financial Counsellor’s Association (FCAN) will be holding its annual conference at Morpeth in the Hunter Valley from Sunday May the 18th to Wednesday May the 21st. The conference theme will be ‘Peaceful Solutions’, and there will be sessions on establishing adequate boundaries as a counsellor, dealing with dodgy debt collectors, and building constructive alliances. There will also be information sessions relating to tenancy, Centrelink family tax benefits, insurance issues and credit reporting, as well as a detailed explanation of the changes to the bankruptcy laws.
For further details contact Lydia Fournaris on (02) 47 312 598.
Financial Counsellor appointed to Fair Trading Advisory Council in NSW
Narelle Brown (co-ordinator of Ryde Eastwood Financial Counselling Service in NSW) has been appointed to the Fair Trading Advisory Council (NSW) for a term of 2 years.
Letters
This is a letter from Carolyn Bond, Manager of the Consumer Credit Legal Service in Victoria, to Jan Pentland, the Chairperson of AFFCRA. Carolyn’s suggestions seem to be very timely.
Dear Jan,
I read the article on problems for members of armed forces going bankrupt in Sharkwatch. I remember finding this very frustrating years ago in Footscray, where I had a number of clients who were members of the armed forces.
I reckon a brief letter to whoever is responsible (Minister for Defence??) would be good, outlining that: this approach reduces the amount of assistance that community agencies (and the Defence Departments own welfare staff) can provide to members of the armed forces.
Such a policy could increase the amount of irresponsible lending to armed services personnel, where lenders are aware that the person is unlikely to enter into bankruptcy, even if overcommitted.
The use of consumer credit, and need for consumers in certain circumstances to use bankruptcy, has changed significantly since the policy was adopted (we assume, many years ago).
While it is not our area of expertise, the Department should examine whether the Defence Force's approach to this is more likely to expose a member to "blackmail" or "coercion". For example, a member in desperate financial circumstances may pose more of a risk than a member who is bankrupt.
Regards,
Carolyn Bond
Manager—Consumer Credit Legal Service (Vic)
This letter was printed with the permission of the authors
How Accurate Are Media Forecasts of Credit Debt?
By Norm Hannelly
(Credit Helpline NSW)
The Reserve Bank of Australia (RBA) published the Total Credit Card Advances (TCA) for September 2002 as $21.694 billion. The RBA has since followed up with publication of the Total Credit Card Advances outstanding as of October 2002 as $21.954 billion. There have been many media comments as to the alarming rate of growth of this type of debt to the nation. Most media analysts forecast a December 2002 TCA of $22 billion. Such forecasts are surprisingly conservative, considering the October figure at $21.954 billion is virtually $22 billion anyway. Allowances for reasonable projections for November and December seem to have been forsaken. This is particularly alarming considering that Christmas spending is notoriously heavy with regard to credit card spending.
Reasonable projections can be made when viewing the complete data as issued by the RBA. In fact it becomes obvious that the December Quarters of the years quite often reveal a greater increase than their corresponding September Three Quarters. The year 1988 and all between 1991 to 1997 (inclusive) show December Quarters greater than the three previous Quarters of each of those years.
If one views the data from 1998 to 2001, the December Quarters of each year show a figure less than the total previous three Quarters of the same year. However, the rate of increase is disproportionately high considering the comparison is three months to nine months.
Taking the September 2002 TCA %Increase of 7.892774 and multiplying by the Mean TCA % Increase Ratio of .684 the projected percentage Increase becomes 5.4 %. Extrapolating the TCA for September 2002 ($21.694 billion) by 5.4 % brings the projected December 2002 TCA to $22.865 billion.
In view of the TCA figure of $22.864 billion for December, 2002, as published by the RBA in February, 2003, the above method of forecasting withstands critical scrutiny. The ramifications are that reasonable projections for December may be made after September TCA release from the RBA.
Centrelink Debts & Bankruptcy: The Southcott Decision Revisited
SECRETARY, DEPARTMENT OF SOCIAL SECURITY v ANTHONY SOUTHCOTT [1998] 323 FCA
By Nicole Preece
(Wesley Community Legal Service)
Mr and Mrs Southcott were partners in a trucking business. However, they separated and Mrs Southcott continued to carry on the business alone. Mr Southcott was no longer employed in their business and did not receive any income from it. Thus, he applied to the Department of Social Security for unemployment benefits, claiming that he no longer received any income. He received benefits between 7 May 1991 and 28 June 1993. However, tax returns lodged on his behalf for this period reflected that he had indeed received a share of the profits of the business. In August 1994, the Department of Social Security decided that there had been an overpayment of $7,558.28 between the above dates.
On 12 April 1995, he appealed to the Social Security Appeals Tribunal (SSAT) against this determination, and on 4 July 1995 Mr Southcott was made bankrupt.
The Social Security Legislation Amendment (Carer Pension and Other Measures) Act 1995 was then enacted as new legislation. This legislation widened the circumstances in which the Secretary for the Department of Social Security (SDSS) could waive the right to recover a debt owed to the Commonwealth.
On 22 January 1996 the Social Security Appeals Tribunal decided that the recovery of Mr Southcott’s debt was waived under s1237AAD of the Social Security Legislation Amendment (Carer Pension and Other Measures) Act 1995 (Cth). It therefore set aside the decision of the delegate of the SDSS. The SDSS applied to the Administrative Appeals Tribunal (AAT) for a review of the SSAT decision. The AAT varied the decision of the SSAT but still in favour of the client. The SDSS then appealed the decision to the Federal Court of Australia (FCA).
At the FCA Justice North heard the appeal, which was to determine whether the Administrative Appeals Tribunal erred in holding that the Bankruptcy Act 1996 (Cth) does not allow the Department of Social Security to recover a debt from Mr Southcott.
The Federal Court held that:
- A debt to the Commonwealth cannot be recovered during bankruptcy. They merely have a right to prove and share in the estate like all other creditors.
- “It is a basic notion of the law of bankruptcy that upon bankruptcy the right of a creditor to the payment of a debt is converted into a right to prove in the bankrupt estate.”
- “The effect of the bankruptcy however is that the debtor is no longer obliged to pay his creditors; indeed he is disabled from doing so. If he offered payment they could not safely accept it; their right is a right of proof against the estate.” (Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589).
- “The Commonwealth is generally in the same position with respect to its provable debts as any other creditor since the Bankruptcy Act binds the Crown in right of the Commonwealth.”
- Due to this interpretation of the new legislation (s1224(2) Social Security Act 1991 (Cth)) it overturned much of the previous case law that had found the order not to be a remedy against the property of the bankrupt. (Re Stewart v Secretary, Department of Social Security (1985) 8 ALD 515; Taylor v Secretary to the Department of Social Security (1988) 18 FCR 322.)
- “The change in wording means that the deduction procedure will never be available to the Secretary during bankruptcy because, when further social security payments are made during bankruptcy, there will be no debt due to the Commonwealth within the meaning of the opening words of s1224(2). Similarly it is not open to the Secretary to give a garnishee notice during bankruptcy.”
What is the practical effect of the Southcott decision?
- The Southcott decision changed the law so that a social security overpayment (which was not incurred by fraud) is provable in bankruptcy and released upon discharge from bankruptcy.
- Clients may consider bankruptcy to prevent the deduction from any ongoing benefits.
- The present state of the law is open to the Government or the Courts to attempt to change its effect.
Telstra’s New Low Income Initiatives:
By Wayne Warburton
After substantial consultation with community and welfare groups, Telstra has produced a number of initiatives for low income customers, including the ‘Access for Everyone’ Program and changes to the ‘In Contact’ program. A number of these changes are long overdue and will be welcomed by financial counsellors. A brief overview of these changes is detailed here. More detailed information can be obtained by searching the massive Telstra webpage at www.telstra.com.au�
Changes to the InContact program (from Feb. ‘03)
In the second week of February, Telstra activated a new capability in all of its InContact phones, so that customers could call out using a pre-paid card.
Previously, call outs were only possible to emergency numbers, to Telstra customer service lines for phone problems, and to Homelink 1800 services. None of these options have offered much joy to InContact users in terms of making contact with important others, as few of these contacts would have a Homelink 1800 number (Homelink 1800 services involve the call recipient paying public telephone rates for each call in, and are thus usually only installed by welfare agencies or very committed family members). Overall, these restrictions on the functioning of InContact phones have been unsatisfactory because (a) customers could not make calls to many important contacts (such as their GP, financial counsellor, Centrelink case officer etc.), and (b) the telephone is the only form of contact many isolated people have with their support networks (lack of social support has been clearly associated with increased rates of physical and mental illness, poorer recovery from illness, reduced immune functioning, and depression).
Under the new system, InContact users can make outgoing calls using a pre-paid ‘Phone away’ card. These are available in $10.00, $20.00, $50.00 and $100.00 denominations, and can usually be purchased from Telstra shops and most newsagencies. To make a call, users dial 18919 or 1800 051 819 and follow the voice prompts. They will be asked for their 12 digit card number and for the number of the call recipient. Costs are deducted in real time from the card’s balance.
The Access for Everyone Program
This has a number of facets, most of which involve the upgrading of existing low income measures.
InContact for Crisis Accommodation (from July ‘02)
Telstra has undertaken to provide InContact phone services to crisis accommodation properties funded by the Crisis Accommodation Program (CAP). These are called Sponsored Access InContact Services, and like all InContact phone services, are free of rental charges.
These services are connected in the name of the organisation which owns or manages the property, and not in the name of the individual residing at the property.
Silent numbers are also available with this service, free of charge, upon request. This is particularly important for those crisis accommodation clients who are fleeing domestic violence or other types of persecution.
Owners or managers of CAP properties can arrange for an InContact service to be provided by ringing Telstra on 1800 020 555 and making application.
The Telstra Bill Assistance Program (from Aug. ‘02)
This takes the form of vouchers of a similar type to the electricity and water vouchers that have been available for some time. Telstra provides the vouchers to one primary Welfare organisation in each state, and other welfare organisations in that state need to arrange for their vouchers through this agency. The relevant contact agencies are:
ACT: The Smith Family
Northern Territory: The Salvation Army
NSW: The Smith Family
Queensland: The Salvation Army
South Australia: Anglicare
Tasmania: The Salvation Army
Victoria: The Salvation Army
Western Australia: Anglicare
Unpacking ‘Access For Everyone’
This program is fully funded by Telstra, but the issuing of the vouchers is at the discretion of the welfare agency itself. It is important to note that the vouchers can only offset a bill for a Telstra fixed home phone account.
Introduction of Homeline Budget (from Aug. ‘02)
This service is only suitable for those residential customers who have a low income, have just one fixed line service, and who make very few calls per month. Basically, phone rental costs are lower than average (currently $17.50 per month), but call costs are higher (e.g., untimed local calls are 30 cents each). Low and capped STD rates are also available at various times (e.g., STD calls between 7.00 pm and midnight on weekdays are capped at a maximum of $3.00). The exact rates are available by calling 13 22 00, or at: www.telstra.com.au/products/product.cfm?prod_id=5283�
New MessageBox Service (Dec. 02)
Specifically designed for the homeless, for very low income groups and for people without stable accommodation MessageBox enables users to set up a personal message box so that they can receive voice messages no matter where they are in Australia. These messages can be retrieved free from most Telstra fixed phones or Telstra public payphones.
People can apply for a MessageBox kit through the Supported Accommodation Assistance Program (SAAP), and through those welfare agencies which provide services for the homeless or who are involved in crisis situations such a domestic violence. The kit provides full instructions, a personal access code, and contact cards which can be given to friends and family.
InContact Message Box (Dec. ‘02)
InContact users can now also use the Telstra MessageBox service. Conditions are the same as for other MessageBox recipients—message retrieval is free from Telstra fixed phones and Telstra public payphones.
Enhancements made to the Telstra Pensioner Concession Scheme (from Sept. ‘02)
Those eligible for this scheme include holders of Centrelink and Veteran’s Affairs Pensioner Concession Cards. All existing concessions remain, but Telstra now also provide a guarantee that the bill for fixed line services for the average pensioner will not increase each year by more than the Consumer Price Index (CPI), and have introduced a further discount on line rentals for some home plans (details are available on 13 22 00). Further enhancements to this scheme are planned.
Enhancements to Homelink 1800 (Dec. ‘02)
Homelink 1800 is a service that enables people to call important contacts without having to pay for the call. An individual or community group can apply to be given a 1800 number which is linked to a Telstra home phone service. There is no charge to the caller, as all call costs are charged back to the home account at public payphone rates. There is no connection fee and no need for coins, and the service can be accessed from most fixed home, business or payphone services across Australia. In addition, Homelink 1800 numbers can be accessed from InContact phones, without a prepaid card.
Overall, these initiatives seem to be very good news for low income and homeless users of telecommunications. Although I suspect that these initiatives are, in part, a way of demonstrating to the public that Telstra is a community minded corporate citizen, who will meet their public obligations when fully privatised, I can only applaud Telstra for its ‘Access for Everyone’ program. The community groups who had input into these initiatives should also be acknowledged. We as financial counsellors need to keep the pressure on Telstra to maintain this program, especially if Telstra is sold off.
Wayne Warburton is one of the representatives on the Telstra Consumer Consultative Council Credit Management Working Group.
The Law Matters
by Richard Brading
Principal Solicitor
Wesley Community Legal Service
What About Lenders Who Fail to Comply With Credit Law?
Before the Consumer Credit Code commenced on 1 November 1996, credit law in Victoria, NSW, Queensland, Western Australia and the Australian Capital Territory was regulated by the Credit Acts. The Credit Acts imposed very strict disclosure requirements, coupled with a tough system of automatic penalties. Where a credit contract failed to comply with key provisions of the Credit Acts, the credit provider automatically forfeited its right to credit charges (that is, interest), and had to apply to a Tribunal to get the credit charges reinstated. While most regulated credit providers did a fair job in complying with the Credit Acts, some were lax and suffered the consequences. Notable was the State Bank of NSW, which was hit with penalties in excess of $5 million for failure to comply with the Credit Acts.
The recent decision of the Victorian Civil and Administrative Tribunal (VCAT) in ANZ v Director of Consumer Affairs [2003] VCAT 23, provides some valuable insight into the legal approach to civil penalties. The ANZ Bank had a poor level of compliance with the Credit Act since the Act began in February 1985. From mid 1988 onwards, the Consumer Credit Legal Service (CCLS) of Victoria alerted ANZ to the systemic errors in its personal loans, but the ANZ largely ignored CCLS for years and hoped it would go away. However by 1993 ANZ was forced to act and commenced an application to recover its credit charges, adopting a strategy of delaying the proceedings for as long as possible and trying to deal with cases one at a time. It was not until 1999 that ANZ was forced to take serious action, essentially due to pressure from CCLS and the law firm Maurice Blackburn Cashman (MBC). From then, the ANZ adopted a strategy of resolving the matter through negotiation and mediation, which resulted in a publicly reported settlement.
When the case reached the VCA Tribunal there were 850 consumers who had joined the CCLS/MBC class action. As a result of media advertising, that number grew to 2,500 consumers who claimed compensation for defective contracts. These consumers were entitled to be directly compensated and will receive a total of $850,000 under the settlement. An earlier group of consumers had already received $800,000.
But what about the many consumers who never joined the class action? ANZ wrote 362,000 personal loan contracts under the Credit Acts. Defects in many of these credit contracts included:
- the contract was not in writing
- the contract was not signed by the debtor
- the contract showed two different annual percentage rates
- ANZ failed to disclose the insurance commissions it received
- ANZ failed to make allowance for insurance rebates when contracts were refinanced
- failure to disclose the date the contract was signed
Instead of checking each contract for compliance with the Credit Acts, a university expert was appointed to check a sample of 1,540 contracts. This sampling process identified the actual percentage of defective contracts. As a result, the settlement requires payment of $5,250,000 into the relevant consumer funds in the Credit Act jurisdictions, according to the number of loans written in each Credit Act State. 46.89% of the loans were written in Victoria, so $2,461,725 will go to the Victorian Consumer Credit Fund. Lesser amounts will go to the NSW Financial Counselling Trust Fund and to the funds in Queensland and WA.
ANZ v Director of Consumer Affairs
The decision sets a precedent as to the likely levels of compensation that will apply to future cases that deal with breaches of the Consumer Credit Code. Minor errors get no compensation. Serious errors are compensated by a refund of 15% of the credit charge. A contract with a serious error and one or more non-significant errors is compensated by a refund of 20% of the credit charge. And errors in the annual percentage rate get a whopping 45% refund. The sample found that 4.8% of contracts had this defect.
The practical problems which faced consumer advocates who took on the ANZ resemble those in the classic David and Goliath scenario. The strain on the CCLS resources for over a decade must have been considerable. Collaboration with the experienced class-action law firm Maurice Blackburn Cashman appears to have been a prudent step in managing such a massive case.
On 1 November 1996, the Consumer Credit Code replaced the Credit Acts. The Code covers just about all consumer lending, but the tough civil penalty regime for compliance failures was replaced by a watered-down version. There is no automatic loss of credit charges for credit providers, so they have little need or wish to apply to any tribunal or compensate consumers for breaches of the Code. There has been only a handful of civil cases, and government consumer agencies have not been active in initiating these.
Banks and other major lenders have taken considerable trouble to try to comply with the Code. They have been zealous in complying with the minutiae of the Code and perhaps also succeeded in confusing their customers with endless pages of compliance information.
By contrast backyard lenders are springing up in increasing numbers. Many have evolved from payday lenders or pawnbrokers, whilst others are car dealers or other retailers. These backyard lenders take little notice of the intricacies of Code compliance. They rely on a number of defensive strategies, including the delay tactics seen in the ANZ case.
A major difficulty in tackling backyard lenders is the small number of consumers who are willing to participate in a class action. Locating and gathering this small number of consumers will be a challenging task. The task would be assisted by having a single National or Statewide point of referral for financial counsellors or consumer advocates which will hold a list of all known backyard lenders and accept referrals of potential litigants.
The Social Security Appeals Tribunal (SSAT)
Because financial counsellors are seeing an increasing number of clients who face action due to Centrelink debts, it is perhaps timely to examine the function of the Social Security Appeals Tribunal (SSAT).
The SSAT is a statutory body established to review decisions made in relation to social security, veteran’s affairs, education or training payments. It is completely independent of Centrelink and the other relevant bodies, and has wide powers under the Social Security (Administration) Act 1999 to overturn their decisions.
Almost any decision made by Centrelink can be appealed, including instances where:
- Payments have been reduced, suspended or cancelled
- A claim for payment has been rejected
- An overpayment has been raised or is being recovered, e.g., disputes about the debt or the rate of its recovery.
- There are issues about rates of payment. e.g., disputes about the way income or assets have been assessed.
Time limits and pre-requisite actions for appeals
Before an appeal can be made to the Tribunal, the disputed decision must be reviewed by a Centrelink Authorised Review Officer (ARO) or a DVA Service Pension Review Officer (SPRO). If this has not occurred, the SSAT will not hear the appeal.
It is also important to note that in the instance where an appellant wishes to be granted arrears payments from Centrelink, these will NOT be paid unless the appeal was lodged within 13 weeks of the original decision, regardless of the ultimate SSAT ruling. Further, student assistance appeals must be lodged within 3 months of the internal review by the Centrelink officer and Family Assistance appeals must be lodged with an authorised review officer within 52 weeks of the original Centrelink decision and with the SSAT within 13 weeks of the review.
If these requirements have been met, arranging an appeal to the SSAT is fairly straightforward.
| City | Location | Postal Address | Phone and Fax | |
| Adelaide | Level 12 Sun Alliance & Royal Insurance House 43 Grenfell Street Adelaide, SA, 5001 |
GPO Box 9943 Adelaide, SA, 5001 |
Phone: 08 8400 4900 Fax: 08 8400 4999 Freecall (SA): 1800 011 140 |
ssat.registry.adelaide@ssat.gov.au |
| Brisbane | 8th Floor Flight Centre Building 157 Ann Street Brisbane, QLD, |
GPO Box 9943, Brisbane, QLD, 4001 |
Phone: 07 3005 6200 Fax: 07 3005 6215 Freecall (Qld): 1800 011 140 |
ssat.registry.brisbane@ssat.gov.au |
| Canberra | 5th Floor Ballieti House 71 Northbourne Avenue Canberra, ACT, 2600 |
GPO Box 9943 Canberra, ACT, 2601 |
Phone: 02 6200 3700 Fax: 02 6200 3709 Freecall: 1800 011 140 |
ssat.registry.canberra@ssat.gov.au |
| Darwin | 2nd Floor TCG Centre 80 Mitchell Street Darwin, NT, 0800 |
GPO Box 9943 Darwin, NT, 0801 |
Phone: 08 8936 1500 Fax: 08 8936 1599 Freecall (NT): 1800 011 140 |
ssat.registry.darwin@ssat.gov.au |
| Hobart | 8th Floor Tower Block 188 Collins Street Hobart, TAS, 7000 |
GPO Box 9943 Hobart, TAS, 7001 |
Phone: 03 6211 2800 Fax: 03 6211 2899 Freecall (Tas): 1800 011 140 |
ssat.registry.hobart@ssat.gov.au |
| Melbourne (Head Office) |
14th Floor 628 Bourke Street Melbourne, VIC, 3000 |
GPO Box 9943 Melbourne, VIC, 3001 |
Phone: 03 9954 0700 Fax: 03 9954 0749 Freecall (Vic): 1800 011 140 |
ssat.registry.melbourne@ssat.gov.au |
| Perth | 9th Floor London House 216 St. Georges Terrace Perth, WA, 6000 |
GPO Box 9943 Perth, WA, 6001 |
Phone: 08 9229 1300 Fax: 08 9229 1315 Freecall (WA): 1800 011 140 |
ssat.registry.perth@ssat.gov.au |
| Sydney | 11th Floor Parkview 157 Liverpool Street Sydney, NSW, 2000 |
GPO Box 9943 Sydney, NSW, 1004 |
Phone: 02 9202 3400 Fax: 02 9202 3499 Freecall (NSW) 1800 011 140 |
ssat.registry.sydney@ssat.gov.au |
Making an appeal to the SSAT
Applications may be made by:
- Writing to the nearest SSAT Office
- Telephoning the nearest SSAT Office
- Visiting the nearest SSAT Office in person.
All of the relevant information and forms can also be obtained via the internet on this web address:
http://www.ssat.gov.au/Internet/ssat.nsf/allpages/homepage�
There is no charge for the service, and travelling expenses to the hearing can be reimbursed.
The hearing
It is not imperative that the appellant be at their hearing in person, however the SSAT strongly advise potential appellants to attend their hearing if they can. For those in remote areas, the SSAT visits country areas from time to time, and also has facilities to hold hearings via video conference.
Hearings are ‘relaxed and informal’ according to the SSAT, and take the form of a discussion between the applicant and Tribunal members. At the hearing appellants are given the opportunity to provide additional information, and it is this information that can often sway the Tribunal to find in the appellant’s favour.
It is important for financial counsellors to note that the appellant can bring a friend, family member or advocate. This means that financial counsellors are welcome at their client’s hearings. In contrast, Centrelink are not physically represented at the hearing at all. Their case in total is included in a document which is sent to the Tribunal and is also sent to the appellant before the hearing. The SSAT is at pains to assure people that if they do not have representation they will not be disadvantaged, and that the Tribunal will carefully consider all aspects of their case, whether they are represented or not.
Outcomes
The decision of the SSAT will be made after the hearing, and the decision, plus full written reasons for it, will be posted to both Centrelink and the appellant within 14 days of the hearing. Last year, the SSAT heard more than 9000 appeals, and found in favour of the appellant in 34% of cases.
Appealing the outcome of the SSAT hearing
If either Centrelink or the appellant are dissatisfied with the outcome, they can appeal the SSAT decision by making application for a formal hearing at the Administrative Appeals Tribunal, which resolves disputes between people and government agencies. The application is free, and the forms can be obtained by writing to the AAT registry at GPO Box 9955 in each capital city. The form must be lodged within 28 days of the SSAT decision, although late applications are occasionally accepted. The AAT will not order costs against an appellant for Centrelink matters.
St. George Equity Loans: Good News For Seniors?
The St George Bank Limited has reintroduced a Home Loan Equity Scheme for seniors. It is called St George Seniors Access Home Loan and caters for seniors (over 65) who have equity in their homes and need a loan for a new car or any other purpose, such as overseas travel.
The St George Seniors Access Home loan has a variable rate and is a loan secured by a mortgage against an owner occupied property.
Perusal of the brochure and subsequent enquiries have revealed that the St George Seniors Access Home Loan may apply only to those whose names appear on the property title, and only to those who fully own that property. Couples who jointly own their property outright would need to be joint applicants for either or both to obtain such a loan.
At first glance it would appear to be a good scheme. The maximum loan amount available will vary depending upon the ages of the homeowners as well as the value of the property. See the table below.
|
Age of Youngest Applicant |
Minimum Loan Amount |
Maximum Loan Amount |
| 65-69 Years | $10,000.00 | $80,000.00 or 15% of the property value, whichever is the lesser |
|
70 Years or above |
$10,000.00 | $100,000.00 or 20% of the property value, whichever is the lesser |
Repayments can be deferred until the property is sold, or until the borrowers no longer live in the home, or until all borrowers are deceased. When one of these events occurs however, the loan must then be repaid in full, including all of the accrued interest and charges. It is also possible to make voluntary repayments at any time.
Prospective applicants should read the fine print, consult a Centrelink FIS Officer or an ASIC registered Financial Planner before signing a contract of this type.
If the loan is for investment purposes, consideration should be given to whether any changes to income or assets will cause a reduction in Centrelink entitlements.
Teleconference: Self care for counsellors
On the 20th February, a teleconference was held on the subject of self care for counsellors. This has been a vexed issue in financial counselling. Many financial counsellors work under heavy pressures – high workload, heavy demands from clients and employers, difficult working conditions, high emotional stress – and a surprising amount leave the industry due to burn out. Ten teleconference participants from across Australia ‘met’ by phone to discuss self-care issues. Although these 10 represented a diverse cross section of the financial counselling community, a surprisingly consistent picture arose as to the types of self-care challenges that financial counsellors face, and the ways in which these might be addressed.
What are the signs that something is wrong?
A list of symptoms which might indicate that a financial counsellor has been under stress or could be burning out was compiled from instances in each counsellor’s personal experience. These are not ranked in any order of importance but instances which arose repeatedly in conversation are marked with an asterisk:
- Depression *
- Tiredness
- Anxiety
- Panic attacks
- Trouble coping with too many demands
- Can’t stop worrying
- Avoidance
- Want to run away
- Loss of empathy with clients
- Withdrawal from other staff
- Withdrawal from clients
- Withdrawal from family
- Tiredness/Exhaustion
- More emotional
- Anger at clients
- Feelings of cynicism toward clients
- Over-involvement with clients
- Teary/crying
- Feeling frustrated
- Poor performance in the workplace **
- Ineffective **
- Make bad decisions
- Overworking/obsessive about working
- Trying to please everybody, but not succeeding.
- · Poor cognitive functioning **
- less able to retrieve things from memory *
- less able to think things through *
- poor problem solving
- Physical illness
This list appears to line up with the thoughts of burn out expert, Christina Maslach, who suggests that burn out causes emotional and cognitive exhaustion (hence the symptoms of depression, anxiety, emotionality, cognitive deficits and tiredness), cynicism which comes from a need to protect oneself (hence the avoidance, withdrawal, anger toward clients etc.) and loss of workplace efficacy (hence the reduction in workplace performance).
Interestingly, those participants who had experienced burn out said that they would now be able to identify when they were heading towards it again, suggesting that there are clear warning signs that occur.
Contributory factors
Factors which might contribute to burn out included:
High and unrelenting expectations from clients and employers was a factor that featured prominently in this discussion. A number of counsellors felt that clients asked for more than the counsellor could give, and the issue of having effective boundaries was raised as being important.
Clients have complex life issues which can become draining for the counsellor. They can take a lot of concentration to understand, and a lot of emotional resources are expended in empathising with the clients and coping with our own responses to their situations.
The client’s behaviour can often lead to the counsellor feeling cynical. It is hard to maintain unconditional positive regard for a client who lies, behaves aggressively, is abusing the system or is unpleasant in other ways. To do so puts a strain on our own emotion systems and adds to stress.
Burn out can begin to occur without our conscious awareness. In this way it can creep up on us and become critical without our being fully aware that this is happening, and thus without us taking any remedial action to fix things. In addition, it is possible to make unhelpful responses (such as withdrawing from clients or workmates) without being aware we are making them.
Who should help to monitor our workplace health?
Given that we may be demonstrating symptoms of work stress or burnout without being aware of it, who is the best person to keep a watchful eye on us? The answers to this question differed according to each person’s situation, but it was commonly acknowledged that our supervisors play a pivotal role in monitoring us for early signs of burnout, as do our spouses/partners, workmates and friends.
Promoting job engagement
Factors seen as important for job engagement included:
Challenges: are an essential part of making the job worthwhile and interesting, and should be sought if they do not already exist.
Diversification of duties: also keeps the job interesting (and challenging). For financial counsellors this may mean expanding into community education, creating outreach programmes to outlying communities, networking with other related services, or undertaking further professional education. The possibilities are endless.
Gaining feedback that we are doing a good job: makes all the hard work seem worthwhile, and helps us to know if we are on the right track. This point was repeatedly raised in discussion. Other feedback helps us to make the necessary adjustments to our work practices, and again leads (eventually) to greater feelings of workplace self-efficacy.
Believing that what we do is important: is essential for job engagement and to maintain motivation. This may arise from positive feedback, from community and peer recognition, and from regular, positive casework outcomes.
Signs of job engagement
It was generally agreed that financial counsellors who are engaged with their job would probably display:
- enthusiasm for their work
- high motivation
- energy
- persistence in the face of adversity
- better coping skills
Strategies for avoiding or combating job burn out.
There were many creative ideas put forward as ways of reducing the likelihood of burnout. Here is a sample:
Reduce the workload. Although we could not reach a consensus about what is a fair workload (there are a few workaholics amongst us), and marvelled at the sheer numbers of clients some of us were seeing face to face, it was generally agreed that seeing more than 2 face to face and 2 ongoing clients per day was going to be hard on the counsellor and might compromise the quality of the service provided. It was also agreed that flexibility is needed in deciding on a fair workload. One way we thought of to reduce workload was simply to control our own diaries and to spread clients out, even if it means increasing the waiting time.
Say no more often. This was something some of us really struggle with.
Debriefing and talking through the fears and anxieties related to work was seen as important. For this reason it is vital to have the support of friends and workmates, and to have good supervision. Counsellors in the NT have access to an ‘Employee Assistance’ scheme where people can ring in to debrief.
Social support was seen as an absolutely vital part of dealing with burn out. This might be from supervisors, peers, other workmates, friends or even our own counsellor. When asked ‘what would you do if you thought you were burning out’, the most common answer was ‘talk to someone’.
Good supervision consistently arose as being central to dealing with burnout and maintaining good health in the workplace. Clearly, a financial counsellor who does not have adequate supervision is not only at a greater risk of burn out, but is also missing a huge resource in dealing with it. Financial counsellors should always be adequately supervised.
Regular breaks and a change of scenery seem to be good strategies also. It was thought that getting away from those familiar things which can evoke unpleasant feelings related to work can sometimes be helpful. In the same vein, it can very important to have time to yourself at work.
Take time off work. Go walkabout. Catch a fish. Lie on a beach. Read a book. Make sure you take your holidays.
In conclusion
The teleconference was far too brief, and we merely scratched the surface of this important issue. Nevertheless, many important strategies were discussed and some great ideas for self-care put forward. Thanks to all who participated.
It may be timely to mention that those on the Commonwealth Financial Counselling Program can talk to a financial counsellor about any issues at all by ringing 1800 647 409 between 9.00 and 5.00 (Eastern Standard Time). All financial counsellors from NSW can also ring 1800 650 084 between 9.30 and 4.30 (Eastern Standard Time). Support is literally a phone call away.
A new training intiative: Teaching students the financial responsibilities of car ownership
Ryde Eastwood Financial Counselling Service in NSW felt that they were seeing far too many young people aged at 18 going bankrupt due to uninsured car accidents or due to other related vehicle issues (e.g., the client misjudged how hard it would be to repay the first car they have obtained on credit; clients were sold too much insurance etc), and decided to put into place a training program for students about the financial responsibilities involved in owning and driving a vehicle.
The sessions run for 30 minutes and take a small group of students through a role-play and laptop presentation. Currently 8,500 students are being put through the program, and feedback on the sessions so far has been consistently positive from school teachers, students and interested community groups such as Rotary. Overall, the students seem to be taking an active interest in the class and the message seems to be getting across.
The Ryde Eastwood service has seen a dramatic decrease in such issues since the program began four years ago, suggesting that the program has had a significant positive impact on the car driving youth of the area.
Narelle Brown, the coordinator of Ryde Eastwood Financial Counselling Services has applauded the efforts of the team of financial counsellors that are currently involved with the program - Margaret Kilby, Brenda Turner, Linda Sterling-Levis, Graham Medhurst and John Emdin—and expects the positive influence of the program to continue.
This program sounds like a great initiative which may make a real difference to the incidences of youth debt problems related to cars with which so many financial counselling services are plagued, and has the potential to be successfully implemented in any Australian State or Territory. Narelle Brown is happy for people who are interested in getting further details of the program to contact her at: narelle.brown@CCAS.org.au�
Review of Part X of the Bankruptcy Act of 1966
Recently Norm Hannelly from Credit Helpline in New South Wales made a submission to the Insolvency and Trustee Service Australia in response to their Review of Part X of the Act. The article below is a slightly condensed extract from his submission.
Part X Arrangements, Assignments and Compositions are considered as alternatives to bankruptcy. Obviously these alternatives have helped some parties, but the poor response to their availability suggests a perception that their effect may be inadequate.
If the legislators desire that all parties be treated as equitably as possible under the law of bankruptcy, then the principles of equity, justice and fair compensation should be included in the legislative instruments. Legislative alternatives such as those under Part X offer such equitable compensation or relief, providing the parties reach agreement.
It is hereby proposed that another “Deed” be added under Part X. The proposed deed would seek to address the issues of justice, equity and compensation. It would be applicable only to those Debtors who own Real Property. It is often stated that the principal disadvantage of bankruptcy is that mortgagors would lose their home. Such a social cost affects not only debtors but their families. Equitable alternatives to a loss of home must be socially desirable.
The Proposed Deed could be called a “ Deed of Real Equity”. It could be optional for Debtors who own real property and whose total unsecured debts are less than the current equity in their property.
If agreed, the mortgagee creditor would pay all other established unsecured creditors in consideration for a “share” in the mortgagor’s property. The debtor would then be free of all other unsecured creditors. The mortgagee creditor would keep the mortgage and have a “share” in the mortgaged property as well. The other unsecured creditors would be paid.
Such a deed would result in a “win- win” to all parties.
The editors of Sharkwatch are interested in any feedback on such a scheme and invite any comments or suggestions. Send all correspondence by email to: norm.hannelly@wesleymission.org.au�
CENTRELINK’S PENSION BONUS SCHEME
By Norm Hannelly
(Credit Helpline-NSW)
The Pension Bonus Scheme provides for a tax free lump sum bonus for people who choose to work past AGE Pension age and defer claiming the Age Pension. The bonus is payable when people registered in the Scheme retire after working a minimum of 12 months after they have reached Age Pension age, then claim and receive an Age Pension.
The Scheme is entirely voluntary. Customers can choose to participate in the Scheme or retire and claim the Age Pension. Once a customer has received a payment for Age Pension, they cannot be a member of the Pension Bonus Scheme.
Key points to take into account are;-
- Customers must register to join the Scheme with Centrelink or the Department of Veterans’ Affairs.
- Customers should register within 13 weeks of qualifying for Age Pension or appropriate DVA Pension.
- Partnered Customers should note that both need to register if both wish to participate.
- The work of a partner may earn a bonus for a non-working participant.
- There is a work test, which must be met during the deferment period.
- To be paid the bonus, the customer needs to have been a participant for at least 12 months.
- After 12 months participation the customer can be paid for a part year, based on a pro rata work record.
- The maximum payable is 5 bonus years.
- Periods worked after the attainment of 75 years cannot be included in the bonus calculation.
- Customers must lodge a claim in order to be entitled.
- The bonus is a personal entitlement, if the participant dies before making a claim, the bonus will not transfer to another or to the participant’s estate.
- Before registering for the Scheme customers should seek independent financial advice. At the very least consult a FIS Officer at Centrelink.
- Interested parties should weigh all options before deciding on participation. It could be more beneficial for some retirement age workers to claim part of the AGE or DVA Pension and declare earnings as income.
The bonus amount after 1 year is equivalent to 9.4 % of one year’s foregone pension. The bonus amount after 2 years is equivalent to 18.8 % of two years’ foregone pension. The bonus increases at a rate of 9.4 % each year until the maximum is reached. That is 47 % of five years forgone pension. Remember one off lump sum, tax free.
Pressures Mount for Justices of the Peace:
A new Act in NSW may lead the way for changes in other states
Many financial counsellors are Justices of the Peace (JPs) because the job so often entails duties which require the services of a JP, such as the witnessing of documentation. In NSW, in the past, the appointment as a JP was more or less indefinite for life, so long as the person involved did not engage in any behaviours that might see this privilege revoked. In fact there are more than 200,000 JPs registered in NSW, but because JPs never have to update records about them, a large number of these are deceased or have moved overseas or to other states. Despite this huge pool of JPs, the Attorney General’s Department (AGD) in NSW, which handles all matters related to Justices of the Peace, is constantly inundated with complaints that people are unable to locate a JP when they need one. Consequently, the AGD has determined to overhaul the system. To this end, they have followed the lead of Queensland, SA, the ACT and the NT by introducing a Justices of the Peace Act (JPA) to regulate the activities of Justices. The NSW JPA 2002, was enacted into law in NSW during early 2003.
It is important to note that even though this Act is now law, the requirements of the Act have not yet commenced, and as yet the NSW AGD do not know when the changes will become active. They assure me that there will be an extensive campaign when the AGD have finally set a date from which all statutes of the new law will apply, and expect this date to be late in 2003.
Here is a summary of the changes that will occur:
* Under the NSW Justices of the Peace Act 2002, appointments as a JP will no longer be for life. Instead, Justices will be required to reapply for (and thus justify) their appointments every five years. During the re-appointment process, criminal checks and other probity checks will be performed to ascertain that an existing JP is still a ‘fit and proper’ person to hold that Office.
* If justices do not re-apply for their appointments within their five year period of appointment, their appointment will lapse at the end of that period.
* Justices will be required to provide a contact point on a publicly accessible Registry. For security and privacy purposes, this contact point may be a business, employment or community organisation. This Register may be available over the internet.
* MPs and MLCs will continue to be the persons who nominate Justices.
* A fee will be charged for re-application, although current justices who re-swear their current Oaths of Office when re-applying for their commissions will not have to pay a fee to the Local Court.
* There may be new regulations governing the conduct of Justices and outlining discipline measures for breaches. There may be penalties for failing to update personal details with the AGD.
* Justices may be required to take training before taking their Oath of Office.
When the Act comes into effect, three important things will happen. Firstly, there will be a moratorium on new applications to become a JP, which will probably run for a period of about 6 to 9 months. This is to allow the AGD to establish the new procedures and to put together an accurate JP Register. Secondly, existing Justices in NSW will have 3 years in which to reapply for their appointments. If they do not make application within this period, their appointments will lapse. Thirdly, Justices will be bound by the new laws and conditions detailed in the Act.
Although Justices are not currently required to have a registration number, this will change three years after the commencement of the Act. Existing Justices who do not have a registration number will be given one after the moratorium period to meet this requirement.
At present, only the Northern Territory expect their Justices to renew their appointments (a current NT appointment may be for 5 or 10 years). All other states and territories appoint Justices for life, provided that they continue to meet certain criteria. However, given this precedent in NSW and the increasing public demand that Justices be easily accessible, many informed commentators believe that it is only a matter of time before other states begin to restrict the conditions under which one can be a JP and possibly introduce time limits for appointments. For example, in Western Australia a draft JPA is in the process of being produced, and this will require new Justices to have a minimum tertiary education requirement and will limit the ages at which Justices can perform their duties, much in the way that Tasmania does now. In addition, all states are more vigilantly pressing for Justices to be available for public duties, and pressure for greater training of Justices continues to mount across the states. If you are a financial counsellor and a Justice of the Peace, you should be prepared for changes in the years ahead.
