“Financial counsellor” now reserved for compliant non-profits

Financial Counselling Australia (FCA) welcomes the passage of Section 160C of the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011, by the Federal Parliament earlier this month. This section restricts the use of the terms “financial counsellor” and “financial counselling” to organisations that provide financial counselling services as prescribed under the National Consumer Credit Protection Regulations 2010. While it may seem a minor provision to many people, it represents an historic win for hardworking financial counsellors in the not-for-profit sector.

“Financial counsellors are a unique and important profession providing free, confidential and independent assistance to consumers in financial difficulty. It has been a source of great frustration to us that up until now, use of the term ‘financial counselling’ has been open to anyone,” says Fiona Guthrie, Executive Director of FCA.

“Research published by Monash University in 2009 concluded that our Australian model of financial counselling, based on community development principles and incorporating a social justice philosophy, almost certainly represents world’s best practice. Despite that, however, profit-seeking operators have been able to attract consumers into expensive and unnecessary financial arrangements by purporting to offer financial counselling services. Section 160C will put a stop to this with one fell swoop.”

Coming into effect on 1st March 2013, the new restrictions will apply to any organisation that does not comply with the provisions under the National Consumer Credit Protection Regulations 2010, namely that the agency:

  • does not charge any fees or receive any remuneration arising from the financial counselling service; and
  • ensures that the agency and its staff do not provide any other credit activity outside the terms of the exemption; and
  • ensures its financial counsellors are a member of, or eligible for membership of, a financial counselling association; and
  • ensures its financial counsellors have appropriate training and adequate skills and knowledge.

“Financial counsellors work in non-profit community organisations and their services are free, independent and confidential,” says Ms Guthrie. “They are often seeing clients who are stressed or vulnerable and they provide information, support and advocacy to help these consumers deal with not just their immediate financial situation but also the risk of future financial difficulty. The primary obligation of a financial counsellor is to work in the best interests of their client.”

Ms Guthrie contrasts this service to the commercial activities of debt agreement administrators, credit repair companies, payday lenders and budgeting assistance businesses who very often charge clients a fee for a service that the client could access elsewhere for free.

“Where there is money to be made, there are almost always businesses offering a service for profit,” says Ms Guthrie. “Often, consumers are confused about what is available out there. Fee-charging businesses may take advantage of that confusion, not to mention the vulnerability of many of those who are in financial difficulty. These are the people who can least afford to pay unnecessary fees, so we hope that the upcoming restrictions under section 160C will help direct consumers to the free and supportive services they need.”

People from all walks of life and circumstances speak to financial counsellors. Money problems can happen to anyone. While some people might feel embarrassed about seeking help, financial counsellors are not judgmental about a person’s circumstances, and offer confidential, independent and free assistance.

A financial counsellor will assist by:

  • Doing a full assessment of your financial situation, including regular income and expenditure, assets and liabilities to help you fully understand your position
  • Providing advice about what options, rights and responsibilities you may have
  • Helping to negotiate on your behalf with your creditors, government agencies and any other business providers
  • Referring you to other services you may require, such as legal services, crisis food and accommodation services, and health services

To contact a financial counsellor ring 1800 007 007 from anywhere in Australia