Sharkwatch September 2009
- Notes & Notices
- Vale Jan Pentland
- Loosening of Restrictions on Hardship Withdrawals From Frozen Mortgage Funds
- Credit is Like Chocolate
- FIDO’s 10 Tips To Avoid Identity Fraud
- AFCCRA Update
- The Law Matters: A Clinical Supervisor’s Duty Of Care
Richard Brading, Jodie Rollason
- Bankruptcy Update
Fiona Guthrie, Lyn Brailey
- Teleconference: Insurance, Legal Issues, Professional Behaviour and Difficult Clients
- A New Sharkwatch Competition!!
- Round-Up
News, views and information about financial counselling around Australia
- In the Media
Snippets of interest and information found in the media
Notes & Notices
The new Telstra payment fee: Who is exempt?
Telstra recently announced that it will begin charging a $2.20 fee to recover some of the costs of payment processing where the customer does not use an electronic means of payment. This scheme took effect as of the 14th of September 2009.
It is fair to say that this news has not been received with enthusiasm by the financial counselling sector (or indeed any community sector that I know of), but it is important to know exactly who is exempt from the fee. The
following is a list of those who will NOT have to pay the new Telstra fee.
Automatically exempt
These are the groups who will be automatically exempt from paying the fee:
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Telstra Pensioner Discount customers or customers who have already registered their eligible pensioner card details with Telstra for the credit card payment processing fee discount;
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Telstra Disability Equipment Program product customers or customers registered for another Telstra Disability Service; and
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Bill payments via Centrelink‘s CentrePay service or via Telstra Bill Assistance Program (TBAP) certificates.
Exempt by application
These groups can obtain an exemption from paying the fee (or in the case of Health Care Card holders the admin fee), but must apply to Telstra in order to gain the exemption.
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Customers who hold an eligible Australian Government Pensioner Concession Card provided by the Department of Veterans' Affairs or Centrelink, but who do not already get the pensioner discount;
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Commonwealth Health Care Card holders ($2.20 payment admin fee only);
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Customers who are eligible for but not renting disability equipment from Telstra or registered for a Telstra disability service
The fees apply to bill payments made by Telstra residential customers and Telstra Business customers. Telstra will be writing to those customers highlighting the fee-free options and ways to take them up For more information, Telstra residential customers can visit telstra.com.au/bpfees or call 1800 445 708 and Telstra business customers can visit telstrabusiness.com.au or call 13 20 00.
New Citibank contact details
Hardship assistance teams:
Citibank: 1300 662 030
Bank of Queensland credit card accounts: 1300 441 287
Suncorp credit card accounts: 1300 220 562
Vale Jan Pentland
The Editors of Sharkwatch were saddened and dismayed to hear of the untimely death of Jan Pentland on Saturday the 15th of August, 2009.
Jan was perhaps the best known financial counsellor in Australia. She regularly attended annual conferences for financial counselling organisations across Australia, was a frequent contributor to financial counselling journals and magazines (including Sharkwatch), and was an outspoken
spokesperson for financial counselling and credit-related issues in the media.
Jan at the NFCRS conference for financial counsellors
funded under the Sugar Industry Reform Package, held in
Cairns, November, 2004. After making a significant
contribution to the event, Jan joined financial counsellors
from around Australia at the pool afterwards.
Jan served the causes of financial counselling and the plight of financially struggling Australians in a number of ways. Jan was most notably the Chair of the Australian Financial Counselling and Credit Reform Association (AFCCRA) for a decade. She steered AFCCRA through many changes to
the financial counselling landscape and through AFCCRA being de-funded, unfunded and recently re-funded by the current government. Throughout this time Jan never stopped fighting for financial counselling and for AFCCRA
to be recognised, utilised and properly funded.
Jan also represented the interests of financial counsellors and financially disadvantaged Australians as a consumer advocate/representative on various councils, Boards and committees, including the Board of the Banking and Financial Services Ombudsman (BFSO), the Consumer Consultative Committee of the Australian Competition and Consumer Commission (ACCC) and the Bankruptcy Forum convened by the Insolvency Trustee Service of
Australia (ITSA).
Despite her high status within the financial counselling community Jan was a very accessible person, always available to financial counsellors and happily providing contact details for feedback on a huge range of issues. At
conferences and forums Jan was always an active participant in the social life as well as the business agenda.
It is hard to come to terms with the sudden death of such a well known and well loved financial counsellor. The financial counselling sector is certainly much the poorer for losing Jan‘s energy, passion and commitment. Jan had a big personality and made a big contribution, much of it on her own time. Such a loss is not easily overcome.
We at Sharkwatck would like to join the financial counselling community in Australia in extending our condolences to Jan‘s partner, David, and her children, Liz, Cathy and Chris.
Sharkwatch readers are invited to visit the front page of the AFCCRA website (http://www.afccra.org/), and to follow the links to a tribute to Jan from AFCCRA and her family. Vale Jan Pentland 24.4.46-15.8.09.
Front cover of the Order of Service for Jan‘s funeral at Hawthorn Town Hall, where her life was celebrated by over 700 people.
Loosening of Restrictions on Hardship Withdrawals From Frozen Mortgage Funds
On August 17th, ASIC put out a press release regarding the loosening of restrictions on hardship withdrawals from frozen mortgage funds. This is, of course, welcome news to financial counsellors and their clients. We have
reproduced the press release in its entirety below, so that readers have access to all of the facts.
"ASIC today announced changes to hardship withdrawals from frozen mortgage funds. These changes expand the circumstances in which operators are able to make payments to fund members who demonstrate the
need to access funds on hardship grounds.
The changes to the existing hardship relief provisions include:
1. The cap on hardship withdrawals for each member is raised to $100,000 each calendar year, from $20,000 plus 50 per cent of the member‘s
interest;
2. An investor can make up to four hardship withdrawals a calendar year, instead of a once-only withdrawal (subject to the overall cap of
$100,000); and
3. Hardship grounds are extended:
(a) To cover a beneficiary of a deceased estate of a member where the beneficiary is suffering hardship; and
(b) To make it clear a person unemployed for at least three months without other means may apply for hardship relief.
ASIC first announced hardship relief measures in October 2008. Since then ASIC has provided existing hardship relief to 22 operators for 76 frozen funds.
These funds hold approximately $25 billion of funds under management. Based on responses from 46 funds, these funds have paid out $38M under hardship relief to date. 1452 withdrawal payments have been made with an
average withdrawal of $25,024.
ASIC Commissioner, Mr Greg Medcraft said, 'We have expanded hardship relief to pick up special situations where the industry considers that further discretion for relief is needed'.
Responsible entities of funds will need to apply to ASIC for a variation to their existing hardship relief.
Existing hardship grounds
Our existing hardship relief (which continue in operation) applies where the member is able to satisfy the operator that they meet one of the following criteria:
1. Where the member is unable to meet reasonable and immediate family living expenses.
2. On compassionate grounds (e.g. medical costs for serious illness, funeral expenses or to prevent foreclosure); and
3. In the case of permanent incapacity.
Frozen funds
Mortgage funds froze redemptions in October 2008. Operators can freeze funds in the interests of all members to prevent withdrawals from destabilising the funds. A freeze means that for a period, the operators have decided to delay redemptions until liquidity improves. A freeze does not necessarily mean that there has been a loss of asset value, and it does not necessarily
mean that investors will not get their money back".
This press release is available from:
http://www.asic.gov.au/asic/asic.nsf/byheadline/09-148+ASIC+expands+relief+for+hardship+withdrawals+from+frozen+mortgage+funds?openDocument.
Credit & Chocolate ….
Nina Dubecki and Vanessa Rowsthorn run a website for women about all matters pertaining to finance, under the name of 'Money Girls'. The website can be found at: http://moneygirl.com.au/. Actually, the website is pretty
good. Although it is quite informal in style, the Money Girls provide pretty good advice, along with referrals to some good resources (including the Commonwealth Financial Counselling Program). We at Sharkwatch liked
the following Money Girl advice published in the Melbourne Leader.
"Credit. It can be tricky and oh – so – tempting. It‘s like standing in the middle of a chocolate shop with nothing to stop you from eating anything you want -
But knowing you‘ll pay for it later".
FIDO’s 10 Tips to Avoid Identity Fraud
1. Always visit the website of an organisation by typing the web address into your browser
If you receive an email inviting you to click on a link, always type the web address into your browser or email or call your friend or bank and confirm the contact. Be wary of emails or phone calls that supposedly come from your
bank.
Why? These may be phishing (email) or vishing (phone) scams which try to grab your personal details by taking you to a hoax website that often looks genuine.
2 Treat social networking sites in the same way as face-to-face meetings
Think carefully about what information you put on Facebook, MySpace and other places where you can meet and interact with others. Do your 'friends' really need to know your date of birth, mobile number, employer or home
address? Limit access to your profile to your close friends only and don't be tempted to add friends who you do not know. Not every friend has your best interests at heart.
Why? You would not give all your personal details to someone in a meeting so why reveal it online? Fraudsters can scour your profile for anything they can use for crime and they may be able to obtain enough information to pass themselves off as you. They can also screen-grab your photo.
3 Disable pop-ups in your browser
Disable pop-ups in your browser if you can.
Why? Pop-ups are not only annoying, clicking on the pop-up message may allow others to download and install a program on your PC aimed at spying or identity theft. They may even download a keylogger that records the keys you press and sends details to the scammer.
4 Make your passwords hard to guess
Use combinations of letters, numbers and punctuation for your passwords and change them frequently. Using any single word or easy number combination, for example your pet's name or your birthday, makes it easy
for scammers.
Why? Email is not secure. Scammers can intercept your email, find out your email address and guess your online email password. Never put financial information (such as account numbers, credit card numbers, PIN or passwords) in an email.
5 Always click the 'log out' button when banking online
When you visit secure sites (such as your bank website or email account), make sure you always log out. Avoid using public computers for confidential purposes because even if you are logged out, the details of your activities are still stored on the PC.
Why? If it's a public computer, or any computer someone else can access, scammers can use it for identity theft.
6 Check whether the website is secure
If you're asked to provide personal information, check that the details in the address bar of the browser start with 'https' (the s stands for 'secure').
Why? It makes it easier for scammers and hackers to access sites that are not secure.
7 Check your credit report at least once a year
You can get a free copy of your credit report from these Credit Reporting Agencies: My Credit File (Veda Advantage), Dun and Bradstreet, Tasmanian Collection Service.
Why? By checking your credit report you can make sure no-one is using your name to borrow money or run up debts.
8. Thoroughly check your account statements
Check that you have received all expected account statements. Follow up any unfamiliar transactions by contacting your bank or financial institution.
Why? A missing letter could indicate that a thief stole the letter from your letterbox or changed your billing address.
9 Destroy personal information - don't just throw it out
You should shred, cut up or burn old bills, account statements or cards to prevent scammers from getting hold of your personal information.
Why? Scammers can go through your rubbish in the hope of finding personal information.
10. Lock your letterbox
Make sure that you have a secure lockable letterbox. Check the letterbox regularly and remove mail shortly after it has been delivered.
Why? Identity thieves can easily steal letters from unlocked letterboxes.
This is from the FIDO website at: http://www.fido.gov.au/fido/fido.nsf/byheadline/Identity+theft?openDocument.
AFCCRA Update
Fiona Guthrie, Executive Director, AFCCRA
Remembering Jan
Elsewhere in Sharkwatch is a wonderful tribute to AFCCRA‘s former Chair, Jan Pentland. We miss her every day. As an organisation, we are determined to build on her legacy.
A small group of people are in the process of establishing the Jan Pentland Foundation, a permanent memorial to Jan. This work is being facilitated by AFCCRA. The details of how the Foundation will be structured and operate are still being thought through, for example, it may provide a scholarship to enable the recipient to study to be a financial counsellor. There is also a plan to hold an annual dinner, with a guest speaker, at which the award would be announced. This would probably coincide with the AFCCRA conference.
The AFCCRA conference was probably the last time many financial counsellors saw Jan. It was a wonderful conference and a great tribute to her.
A New Beginning – A Funded Peak Body
As most of you will know, AFCCRA has received funding to play its peak body role once again. AFCCRA was de-funded in 1996 under the Howard Government and it is a testimony to the huge commitment of the members of AFCCRA Council that it continued to operate without any funding since then.
With funding, AFCCRA has now employed an Executive Director (Fiona Guthrie). I am based in my home state of Queensland but will travel as needed. The AFCCRA office is co-located with the Queensland Council of Social Service.
The role of AFCCRA remains unchanged – to respond to national issues affecting financial counsellors and our clients – but with funding we will be able to do this far more effectively.
AFCCRA Council is holding a planning workshop in early November and will develop a draft strategic plan to guide us for the next few years. We will distribute this draft to the sector for comment before finalising it.
Some Policy Issues
AFCCRA continues to be involved in national policy issues , including bankruptcy (see elsewhere in this issue) and credit reform, for example, responding to various proposals from ASIC about how it should fulfil its role as the regulator under the new national credit regime.
Although consumer groups have welcomed the transfer of credit from the States to the Commonwealth, there are still a number of concerns about the actual proposals, including how hardship is defined, which courts will have jurisdiction over credit matters, the possibility of consumer leases providing a loophole for unscrupulous traders and the exemption of retailers from licensing.
More broadly, some state consumer credit legal services and legal aid agencies are at risk of losing the funding they currently receive from State Governments to provide advice and information to consumers and financial counsellors. State Governments may argue that as credit legislation is soon to be a Federal responsibility, then funding of these services should also transfer.
Financial counsellors work very closely with consumer lawyers across Australia and any reduction in these services would be disastrous. In fact, we need more of them, particularly in the states where there is little in the way of access to consumer lawyers. AFCCRA is involved in a national campaign about this issue. This includes all of the legal aid commissions and the community credit legal services across Australia.
The implementation of the credit legalisation has been delayed. The majority of provisions will now come into effect on 1 July 2011 (rather than 1 January 2011). One of the very positive aspects of the new laws are that the Financial Ombudsman Service will have jurisdiction to determine disputes about hardship. Unfortunately the delay puts this back by six months.
Child Support Agency Project
The Child Support Agency asked AFCCRA for assistance in contacting financial counsellors recently. Most states have now organised for the CSA to attend forthcoming meetings. The purpose is to get feedback from financial counsellors as to what the CSA can do to improve the way it interacts with financial counsellors.
The purpose is also to learn more about the CSA clients who come to financial counsellors for assistance.
Reconciliation Action Plan
AFCCRA is one of the first organisations in Australia to have a Reconciliation Action Plan. This is on AFCCRA‘s website. We have also set up an email
discussion group for Indigenous and rural and regional financial counsellors to use, to share information and issues.
AFCCRA Chair
The new Chair of AFCCRA is Carmel Franklin from CARE Financial Counselling Service in the ACT. Carmel was previously the Deputy Chair of AFCCRA.
Thanks
And finally, thank you to everyone for the warm welcome to AFCCRA. I am very excited about the role. There is so much to do and we have a wonderful
opportunity to grow the profession and our influence. I look forward to working with you.
Fiona Guthrie
The Law matters
A Clinical Supervisor’s Duty of Care
Richard Brading
Wesley Community Legal Service
Jodie Rollason
Law student
The purposes of clinical supervision include the improvement of the skills of the counsellor through the review of work issues, and the provision of objective external guidance and personal support. Supervision is also an important quality control measure that reduces the possibility of substandard or negligent counselling.
Supervision often involves the discussion of the counsellor‘s casework, with the supervisor providing direction and guidance. However the supervisor has no direct relationship with the clients of the counsellor. So - does the supervisor have a legal duty of care to those clients?
Duty of care – counselling view or legal view?
Counsellors are familiar with a concept of duty of care, but the strict legal approach to duty of care is somewhat different to what is understood by most counsellors. Counsellors are focussed on the best outcome for
clients, even those clients who have little connection with them. So counsellors may consider that supervisors owe a duty of care to a supervisee‘s clients.
By contrast, lawyers are concerned with a mechanical process involving identification of a legal duty of care, deciding whether that duty of care has been breached, and looking to the available legal remedies.
The counsellor should work to help the client achieve their best outcome from the counselling process. Typically, financial counsellors help the client identify
and choose from a range of options. This means that the client‘s subjective choice is incorporated into the concept of best outcome. The client‘s choice may not be the counsellor‘s choice or even a sensible choice. So the counselling outcome may not be the best outcome from an objective viewpoint and can lead to all sorts of questions about the duty of care.
By contrast, the law focuses in a mechanical way on what is the minimum standard that is acceptable in duty of care relationships. The issue is identifying the line between the standard of counselling that is the bare
minimum and counselling that is substandard.
A counsellor who makes a minor error which results in the client getting the second best counselling outcome or the third best outcome, may have breached their duty of care in a counselling sense, but would probably
not have breached their legal duty of care. A counsellor who makes a major error which results in the client suffering significant loss may have breached
their legal duty of care and be at risk of being sued for compensation.
The law considers that the counsellor with a direct relationship with the client has a clear legal duty of care to provide counselling to a professionally acceptable standard. If the counsellor fails to provide counselling of the professionally acceptable standard, there may be a breach of the duty of care and consequent liability to compensate the client for loss suffered as a result.
What is the acceptable standard?
In N.S.W., s.5O Civil Liability Act 2002 specifies the professionally acceptable standard to be “competent professional practice” as determined by widely accepted peer professional opinion.
In W.A. s.5PB Civil Liability Act 2002 specifies for health professionals that an act or omission of a health professional is not a negligent act or omission if it is in accordance with a practice that, at the time of the act or omission, is widely accepted by the health professional‘s peers as competent professional
practice.
Other States and Territories may have slightly different legal definitions such as a “duty to maintain a standard of care applied to a reasonable skilled professional in the circumstances”. Chin Keow v Government of Malaysia [1967] 1 WLR 813.
Vicarious liability of employer
Not only is the counsellor at risk, but the counsellor‘s employer is also at risk of being sued if the employed counsellor breaches their legal duty of care. The liability of an employer to compensate those that suffer harm or loss as a result of the negligent acts or omissions of their employees is called "vicarious liability". Generally this is a good thing, as the employer should provide insurance that covers the counsellor.
Could the supervisor be liable to a negligence claim by a client?
However, the potential liability of a supervisor to a negligence claim made by the supervisee‘s client is doubtful. There are a number of American sources that suggest that an American supervisor can be liable to the supervisee‘s client. However, we were unable to find any direct Australian authority to that effect.
In order for a client to successfully sue their counsellor‘s clinical supervisor at common law, the client would need to discharge the burden of proving causation. To do this the client would need to satisfy the following two tests:
1. ‘But for’ Approach
The client would need to prove their loss could not have occurred ‗but for‘ the supervisor‘s negligence.
2. Common Sense approach
March v E&M Stramare Pty Ltd (1991) 171 CLR 506 is the leading case on causation, and looks at the common sense approach. In order for the supervisor to be legally liable for breach of the duty of care, the client would need to establish that the chain of causation was not broken when the breach of duty of care passed from clinical supervisor to counsellor, then on to client. The client would then need to prove their loss was not so remote as it was reasonably foreseeable from the clinical supervisors advice. (Overseas Tankship (UK) Ltd v Miller Steamship Co Pty Ltd (The Wagon Mound (No2)) [1967] 1 AC 617).
In reality, the onus is on the counsellor to clarify their supervisor‘s advice or seek a second opinion on advice received in supervision that is doubtful. Supervisors can get it wrong and it is not a complete defence for a counsellor to say that doubtful advice was passed on to clients without double-checking.
All this means is that, it is unlikely for a clinical supervisor to be sued directly by a supervisee‘s client.
But the supervisor could still be sued
However, even if the client cannot sue the supervisor directly, the supervisor could be sued by the counsellor and the counsellor‘s employer.
So where, for example, the supervisor provided incorrect information to the counsellor and that information is passed on to the client, the client‘s recourse would be legal proceedings against the counsellor and the counsellor‘s employer. The counsellor‘s employer would have an insurer, which might then take legal proceedings against the supervisor in the names of the counsellor and the employer.
The supervisor has a clear duty of care to the counsellor. Where the supervisor is being paid by the employer (or is a volunteer for the employer), there is a contractual duty to the employer and also a statutory duty under trade practices legislation.
In relation to the counsellor and employer, the supervisor has a “duty to maintain a standard of care applied to a reasonable skilled professional in the circumstances”. (Chin Keow v Government of Malay-sia [1967] 1 WLR 813). Breach of that duty puts the supervisor at risk of being sued. So the supervisor needs to have professional indemnity insurance cover.
Good practice in supervision
The way to make a lawyer happy is to provide the paperwork. In our view, the supervisor should keep a written record of each supervision session. The written record should include the date of the supervision session, the time of commencement and the time of conclusion, the general issues discussed and specific information about specific client casework that were discussed.
The written record does not need to be lengthy but should cover the essentials and any areas that are unusual or high risk.
The written record should be signed by the supervisor and supervisee. The written record should be created within 24 hours of the conclusion of the supervision session and retained by the supervisor for 7 years.
Because of the importance of confidentiality of the supervision process we are of the view that the written record should be retained by the supervisor and should not be accessible by the supervisor‘s employer. However the counsellor should have the right to view the written record.
Supervisors should be aware of those areas of financial counselling practice that are higher risk, such as negotiating compromises, bankruptcy issues and clients with business debts. When these issues arise in supervision they should be treated with caution and documented in more detail than other areas of supervision. Discussion of the counsellor‘s personal issues would not be recorded in detail unless there were serious performance issues.
Records of supervision sessions would need to be provided to insurance lawyers and the court in the event of a negligence claim, so these should accurately and succinctly record the areas of interest to lawyers.
It is a standard requirement of insurance contracts that full information is provided to the insurer in the event of a claim being made. In our view it is perfectly appropriate to provide records of supervision proceedings to the insurance lawyers for use in defending the supervisor or counsellor against a legal claim. Bear in mind that the likelihood of a legal claim ever being made against a supervisor is extremely low.
Bankruptcy Update
Lyn Brailey
AFCCRA representative on the Bankruptcy
Reform Consultative Forum
Fiona Guthrie
CEO, AFCCRA
Bankruptcy laws are set for a major overhaul under proposed reforms announced just a few weeks ago by the Federal Attorney-General, Robert McClelland.
What we Like
Many of the proposed reforms will be welcomed by financial counsellors and are consistent with the position argued by AFCCRA in submissions over a
number of years. These include:
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increasing the threshold for a creditors petition for bankruptcy from $2,000 to $10,000; and
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increasing the stay period that follows the declaration of intent to file a debtor‘s petition from seven days to 28 days. During the stay period
creditors cannot take any action to recover any debts.
The $2,000 bankruptcy threshold has been in place since 1996, so it is well overdue for review. The higher limit both recognises the change in the value of money and increasing access to credit and will also reduce the threat of bankruptcy being used as a debt collection tool by an unscrupulous creditor over a relatively small debt.
AFCCRA argued in its submission however that the threshold should apply to the original debt owed and should not include additional figures for interest,
collection costs, fees and so on. If these additional amounts were included, it will defeat the intention of the amendment, since debts can quickly escalate. Again an unscrupulous creditor could simply wait until these fees had increased the debt above the threshold. There have been appalling examples of consumers losing their homes over relatively small debts which have
increased exponentially because of costs of this nature.
The extension of the time period from seven days to 28 days will allow a person considering bankruptcy to seek advice about their options. The current seven day timeframe is far too short, particularly if an individual wishes to see a financial counsellor, where waiting lists can be long. AFCCRA argued however that in certain circumstances there should be an option for ITSA to
approve an additional time period of a further 28 days. This longer extension time could be justified where negotiations with creditors are nearing fruition or where more time will allow a home to be sold to avoid bankruptcy.
Some Concerns
AFCCRA does not support the proposed increase in the threshold for debt agreements. Under the proposed reforms these are to be increased by 20%. The present thresholds are: after tax income of less than $62,735.40;
unsecured debts, and assets, of less than $86,647.20.
AFCCRA argued that no changes should be made until the planned review of the effectiveness of debt agreements, due in 2010, took place.
There are also concerns about the need to fill in a Statement of Affairs at the time of lodging a declaration of intent to file for bankruptcy. There are penalties for the filing of inaccurate statements and debtors under pressure, could inadvertently make mistakes and may not have had access to advice before doing so.
What Is Missing?
We were disappointed that the reforms do not include an earlier discharge period for first time bankrupts. AFCCRA had argued previously that a lesser period would be appropriate for some debtors – for example six
months or a year. The timeframe however is untouched and will remain at three years.
The draft legislation is also silent about the National Personal Insolvency Index – this will remain a permanent record of an individual bankruptcy. Entries relating to debt agreements will also remain.
What Has Industry Said?
Not surprisingly, industry submissions have not wholly agreed with submissions from consumer groups. The ABA and Westpac support an increase in the bankruptcy threshold – but only to $5,000. They also argue that the stay period should be 14 days.
Westpac makes the valid point however that ‗current consumer debt services often do not operate in the best interest of consumers‘ – in other words, they
share our concerns about the way debt agreement companies operate. Some debt collectors and legal firms are also opposed to the reforms.
A Final Word
Finally, changes like these do not occur in a vaccum. Jan Pentland, AFCCRA‘s former Chair was a member of the Attorney-General‘s Bankruptcy Reform
Consultative Forum for a number of years and was the principal or main author of a number of seminal reports into problems with the current bankruptcy regime. More recently, Anna Mandoki took over from Jan on the Forum, continuing her good work.
Information about the reforms is available at: http://www.ag.gov.au/www/agd/agd.nsf/Page/Publications_BankruptcyLegislationAmendmentBill2009-ExposureDraft
There are also excellent submissions from a number of advocacy organisations: Legal Aid NSW, Lismore and District Financial Counselling Service, the Homeless Persons‘ Legal Clinic and the joint submission from
the Consumer Action Law Centre and the Financial and Consumer Rights Council.
The consultation process on the bankruptcy reforms has now closed. Watch this space for the final decision.
Teleconference: September 3, 2009
Insurance, legal issues, professional behaviour and difficult clients
Participants
Saskia ten Dam, Townsville Community Legal Service Qld.
David Bell, Centacare Catholic Community Services, NSW
George Grigoriadis, Centacare Catholic Community Services, NSW
Gloria Bernazza, Palm Beach Neighbourhood Centre, QLD
Carol O‘Brien, Lifeline Brisbane, QLD
Denise Brown, Lifeline Narellan, NSW
John Morris, Uniting Care Wesley Adelaide, SA
Lyn Brailey, NFCRS, NSW
Jennifer Gracie, NFCRS, NSW
Topics of Discussion
Participants discussed topics including professional indemnity insurance issues, professional development opportunities in regional areas, the increasing legal aspect to financial counselling and access to relevant legal services, self-care, dealing with difficult clients, and appropriate behaviours towards clients.
Professional Indemnity Insurance
In terms of professional indemnity insurance, it was noted that there are concerns some new financial counselling services are not covered by their agency in regards to professional indemnity insurance. Some participants were unsure of the type of cover required, and Jennifer advised that the insurance cover required is the same kind of insurance that solicitors‘ require. Most of the participants had not seen their agency‘s insurance policy, and it was agreed that financial counsellors should ask their individual agency about the type of insurance cover they have for their financial counsellors and the level of cover? The amount of cover should be around $10million.
Dealing with difficult clients
In terms of dealing with difficult clients, Lyn opened the discussion by raising the case of the client for whom an informal arrangement has been made, but who then contacts the creditor without the knowledge of the financial counsellor and changes the arrangements. Saskia suggested that in this instance, financial counsellors should contact the creditor and advise them to only deal with you directly. She also noted that financial counsellors need to set clear boundaries with their clients given the large amount of effort that goes into negotiating with creditors. Especially given such a case can adversely affect the financial counsellor‘s credibility.
Other strategies included finding out in more depth what was going on for the client – why aren‘t they following through - (Lyn), and closing the client‘s file and asking creditors to now deal directly with the client (David, Jennifer).
Saskia noted the problem of ―Stalker Clients‖ who ring every day (possibly up to several times a day), and continue to annoy the financial counsellor for updated information when the client has been advised to call back in about 2-3 weeks when there may be updated information, but not before. Participants tended to agree that it needs to be made clear to clients that a financial counsellor‘s time is valuable, and that clients need to be asked to take a certain amount of responsibility for their own issues (John).
To this end, Saskia suggested financial counsellors need to find a balance between client and counsellor responsibility, and provide tools/skills to our clients that will help them to take increasing responsibility for their situation.
Self care and burnout
The teleconference then considered self care issues.
A number of participants reported stress related symptoms and behaviours – muscular pain, irritability and impatience, feeling overwhelmed, procrastinating and slowing down.
Participants discussed their strategies for dealing with stress, including breaking down work issues into manageable portions (Lyn), saving work till a time when you can work uninterrupted, leaving a day a week to catch up with paperwork, planning in advance to look after yourself (Saskia), and not booking clients too far ahead (Jennifer).
Typically participants had a 2-3 week time limit on booking ahead, and John noted that he has system in place where calls are lodged with reception, and then he telephones the client back. They may either need an appointment or general advice. This way he also builds rapport with the client before he sees them and there is less likelihood of a ‗no show‘.
In terms of taking ‗time out‘ David asked ―do we live to work or do we work to live?. He mentioned that he takes a holiday every year and when he returns from holiday he rebooks his next holiday for the following year, so there is always something to look forward to in the future. All participants thought this was a great idea. Most of the participants had some sort of time out planned for the next 6 months.
Appropriate behaviour with clients
When discussing appropriate behaviour with clients, it was noted that setting the right environment was important – an appropriate dress code, an atmosphere of respect and dignity for both the client and the counsellor, and a sense of professionalism (including appropriate boundaries).
The issue of gift acceptance was raised. Some organisations allow small gifts such as chocolates that can then be shared with everyone in the office (Jennifer). The need for a code of ethics was raised (David) and it was also noted that it can be helpful to discuss such issues with your supervisor (Lyn).
Financial counsellors and legal issues
The thorny issue of the increasing legal component to financial counsellor casework was then discussed.
It was agreed that financial counsellors are not lawyers and can‘t give legal advice. For this reason, recognising when legal advice is needed, and when to refer to a legal service is very important (David). Although some states
such as NSW have services like the Consumer Credit Legal Centre and Legal Aid (Saskia), other states such as South Australia have no specific consumer lawyers available for financial counsellors (John). This raises the question of where financial counsellors from such states can get specialised legal assistance.
Saskia suggested that financial counsellors could consider using the Welfare Rights Centres in each State, and could also consider accessing the Tenancy Advice Services and Women‘s Legal Services in the various states.
Jennifer also noted that regional areas have access to the National Financial Counsellors‘ Resource Service and Wesley Community Legal Service.
Professional development in regional Australia
The final issue discussed was professional development opportunities for financial counsellors in regional areas. Saskia feels this issue remains the same. There are no real changes and professional development is still difficult to get for regional workers. She would like to see another regional and remote conference (as indeed would we all).
Does anybody have any spare funding money … ?
A New Sharkwatch Competition
Is Sharkwatch getting too stuffy and serious? Apparently so, according to a reader who we will not name. Their suggestion (and a mighty fine one it is) involves a ‗best stories‘ type of competition.
Financial counsellors meet all sorts of clients and creditors, and every financial counsellor I have met has had a wealth of interesting and amusing anecdotes to share. Sharkwatch would like you to share these stories
for the interest, amusement and education of our readers.
Categories
We would like to print the best story in each of the following categories:
-
Most outrageous threat by a debt collector (e.g. take
the baby); -
Best goobledegook lawyers letter;
-
Creditor who has ignored correspondence the most
times for one client; -
Creditor who has failed to provide documentation
most times when requested; -
Creditor who has ignored counsellor authorities most
often and contacted the client directly; -
Most outrageous advertisement for easy finance (must
supply picture); -
Best new scam;
-
Weirdest client reason for getting into financial
trouble; -
Funniest story;
-
Best story overall.
Conditions of the competition
-
All clients must be de-identified to the extent that it
would not be possible for a reader to work out the
person‘s identity; -
The story must be 200 words or less
-
The story should be no more than 3 years old
-
Stories etc already published (e.g. on FIDO website)
would not be eligible.
The goodies
Sharkwatch will provide the winner in each category with their own copy of ―The Bankruptcy Handbook, 2nd Edition.
In addition we have a number of items left over from the NFCRS garage sale. Go to it readers!!
Round Up
Across Australia
Lyn Brailey, Financial Counsellor from the National Financial Counsellors‘ Resource Service (NFCRS), has recently been in contact with a senior manager from Westpac to discuss issues that financial counsellors in NSW have been having with Westpac. He has asked Lyn to provide him with information from financial counsellors across Australia regarding any problems they may be encountering with Westpac.
Lyn has arranged to have regular updates with this senior manager and we ask that Sharkwatch readers send Lyn an email by Friday, 16th October, with any questions or issues that you would like to bring to the attention of Westpac. Lyn will present these to him, and if the issues are generic, will provide the answers to everyone. If the issues are specific to one financial counsellor, she will ask for a contact person to go directly to the financial counsellor to deal with the issues/s.
Of course, if you have any urgent problems that need to be dealt with immediately, please let Lyn know and she will contact him directly.
After 16th October Lyn will continue to be in contact with the senior manager and will continue to take any problems or issues to him in the future.
We regard this on-going liaison with Westpac very favourably and want to assure you that they are very keen to maintain on-going good relationships with all financial counsellors.
Lyn‘s email address is:
lynette.brailey@wesleymission.org.au
Jennifer Gracie
Coordinator, NFCRS
Inaugural Christopher Newell Prize.
Sharkwatch readers will remember that a wonderful consumer advocate, Christopher Newell, died tragically last year (Sharkwatch Vol 9, no. 2, June 2008). We are delighted to read that Telstra are honouring his life and contribution to consumers with disabilities with the ―Telstra-TJA Christopher Newell Prize for Telecommunications and Disability‖.
Sharkwatch would encourage readers to consider writing a paper for publication in the Telecommunications Journal of Australia (TJA) on innovative ways that telecommunications technology can be used to assist people with a disability. Financial counsellors would have a number of unique perspectives in this regard. The details of the award are below:
―Telstra-TJA Christopher Newell Prize for Telecommunications and Disability
Revd Canon Dr Christopher Newell AM (1964-2008)
The Telstra-TJA Christopher Newell Prize for Telecommunications and Disability recognises and commemorates the ground-breaking work that Christopher undertook within the telecommunications industry from 1990 to 2008 in representing the needs of people with disability. The $20,000 prize will be awarded to the best paper offered for publication to the Telecommunications Journal of Australia (TJA) by 15 January 2010 that demonstrates the tangible benefits that the innovative use of broadband or other telecom-munications technology can deliver to assist individuals with disabilities. The best entries will be published in TJA in 2010.
The Prize competition is administered by the Managing Editor of TJA, Dr Peter Gerrand, on behalf of the ACS-TST (telecom-munications Society of Aus-tralia; a Special Interest Group of the Australian Computer Society) using a Judging Panel of independent experts to evaluate and rank the competition entries.
News, views and information on what’s happening in
financial counselling around Australia.
Changes to the Debtor’s Petition Form
A revised Debtor‘s Petition (form 6 ) was introduced on 1 July 2009.
The form has been reformatted so that all the required data fields requiring completion by the debtor including the signature panel, are now on the front
page of the form. In the past debtors often omitted to sign the Debtor's Petition as the signature panel was on the back page.
Also the revised prescribed information now appears on the back page of the form. Following client feedback, there are now short paragraphs containing
information that is relevant to most debtors presenting a petition for bankruptcy. More detailed information on relevant topics will continue to be included in the Personal Insolvency Information booklet.
The new form can be viewed and downloaded from the ITSA website at
www.ITSA.gov.au>Debtors>Forms for debtors, along with the Statement of Affairs form and Instructions which will be available for download as a
single package for the convenience of clients.
New South Wales
New free advice service for builders and trades-people facing financial difficulty
A new service has been set up in NSW to advise builders and tradespeople on business management and insolvency issues.
The service is funded by the NSW Office of Fair Trading as part of the new Building Contractor Advisory Service, and is provided by CRS
WarnerKugel.
Importantly, the service is free of charge and runs 24 hours a day, 7 days a week.
Issues that the service will specifically address include:
-
Insolvent trading
-
Cash flow problems
-
High debt levels
-
Concerns about losing the business or home
The phone number is 1300 100 285
Queensland
David Lawson appointed to FOS Mutuals
Advisory Committee
David Lawson, a financial counsellor from Central Queensland, has been appointed as a consumer representative on the Financial Ombudsman Service
(FOS) Mutuals Advisory Committee. David advises that any feedback regarding Mutuals (Credit Unions and Mutual Building Societies) is welcomed.
David is particularly interested to speak with anyone who used the former Credit Union Dispute Resolution Centre (whose functions were transferred to FOS Mutuals Division as of 1 January 2009) and have used FOS since.
Contact David at: davlaw@bigpond.com or on 0407 585 497.
Victoria
Donna Letchford appointed to FOS Banking and Finance Advisory Committee
Similarly, Donna Letchford, a Victorian financial counsellor has become one of the new consumer representatives on the FOS banking and finance
advisory committee.
She would like input from financial counsellors on issues that need to be raised at the committee. Top of the agenda will be issues to do with the length of time to resolve complaints; it would be interesting to know whether the new process whereby banks and financial institutions are informed of a dispute earlier in the process is making a difference.
If you could let her know of any issues, that would be great. She is happy to discuss by phone as well.
Her contact details are dletchford@camcare.org.au or telephone number (03) 9882 2216.
In the Media
Battlers helped by new laws to avoid bankruptcy
Original story by Malcolm Farr
―Thousands of battlers who fall on hard times after losing their jobs will be saved from the humiliation of forced bankruptcy.
Low-income workers who struggle with mortgage repayments and credit card debts will be the focus of new laws on bankruptcy to be announced by the Federal Government.
Attorney-General Robert McClelland has drawn up plans to assist "people who have simply fallen on hard times" but increase penalties for fraud by "unscrupulous debtors".
In the first three months of 2009, there were 6340 nonbusiness bankruptcies in Australia, compared to 824 business-related financial crashes. In NSW there were 2492 personal insolvencies and 250 business cases.
Under … the proposed laws, the minimum debt at which a creditor could petition for bankruptcy would rise from $2000 to $10,000.
The period between the application for a bankruptcy petition and the start of action to recover debts would be increased from seven days to 28 days. This would give individual debtors more time to get the help and advice needed to negotiate a repayment program and so avoid bankruptcy.
[Eds note: It is sad that in a poll accompanying the story, 74.3% of respondents endorsed that the Government would be ‗creating further debt problems by easing bankruptcy laws‘. We at Sharkwatch applaud any
measures that allow financially struggling Australians to avoid facing a Creditor‘s Petition for fairly small debts.
The Daily Telegraph, Sydney, August 25, 2009
A secret tide of bankruptcy
Original story by Peter Gosnell
The Daily Telegraph details a steep rise in bankruptcies in NSW over the last few years. It shows that the ‗number of insolvents‘ in NSW has increased from less than 4000 in 1986 to over 12,000 since last year, with more than half of that increase occurring over the past 5 years. Last year there was an 8.43% increase in bankruptcies in NSW, and there has been a 64%
increase over the previous 3 years.
This trend is not merely due to increasing population— The Telegraph provides figures showing that the number of insolvencies per head of population in NSW has risen from below .048 to over .056 in just 2 1/2 years.
Victoria is well behind in 2nd place, with a mere (??!!) 7771 bankruptcies.
Australia-wide, there were more than 34,000 bankruptcies last year, with 80% due to an inability to repay personal loans or credit cards. Indeed, over the last 3 years the average default sum for credit cards has risen from $4,500 to $7,000, and the average default amount for any debt has risen from $7,500 to over $9,000. A very disturbing trend.
The article suggests that changed bankruptcy laws may not be the best answer to this growth in bankruptcies, and discusses alternate approaches, such as tighter controls on lending practices.
In support of this view, the article quotes liquidator Nicholas Crouch, who suggests that the proposed amendments to the bankruptcy laws do not address problems in the current legislation and have provisions that ―could make matters worse‖. Mr Crouch was particularly critical of government
support for debt agreements (i.e., Part IX debt agreements) which he suggested ―simply channel bankrupts into a formal arrangement that doesn‘t help them‖ and which he claims artificially lower bankruptcy statistics.
The article also quotes Russell Evans from Veda Advantage, who (not surprisingly) indicates that the increase in bankruptcies offers support for the
argument that positive credit reporting needs to be fast-tracked.
The Daily Telegraph, Sydney, August 29, 2009
