Debt Collector Engaged in Harassment and Coercion
The Federal Court, Perth in August, found that Cash Return Mercantile Pty
Ltd (Cash Return), a debt collection agency, and its former agent, Ms Sharyn
McCaskey engaged in undue harassment, coercion and misleading conduct while
collecting debts from consumers. The Federal court ruling follows action taken
by the Australian Competition and Consumer Commission against Cash Return and
Ms McCaskey.
“This is the first case taken by the ACCC under section 60 of the Trade
Practices Act 1974 which prohibits the use of physical force, undue harassment
or coercion by a corporation (or its servants or agents) in relation to the
payment by a consumer for goods or services”, ACCC Chairman, Professor
Allan Fels, said.�
Justice French found that Ms McCaskey and Cash Return had, while collecting
debts from consumers:
Made an excessive number of telephone calls to debtors;
Adopted a threatening, aggressive and abusive manner in those telephone calls;
and�
Misled debtors and others about debt recovery procedures and the consequences
of non payment of debts.
“The outcome provides some much needed case law on debt collection. The
ACCC action also serves as a warning to debt collectors and suppliers that
consumers are protected by the Act from unfair or intimidating
behaviour”.
Justice French said that the recovery of unpaid debts can be pursued with
firmness, determination and civility without resorting to bullying, bluff,
misrepresentation or stand-over tactics. Justice French found that a supplier
of goods or services or a debt collector, in deciding upon the approach to be
taken to a debtor, should ask the question: “Are the content, the timing,
the location, and other circumstances of my demand for payment reasonably
calculated to remind the debtor of his or her obligations, specify a time
within which it must be satisfied and indicate that civil proceedings for
recovery will be instituted if payment is not made”.
Justice French went on to say that “if the frequency, nature, or content
of the approaches and communications associated with them is such that they are
calculated to intimidate or demoralise, tire out or exhaust a debtor rather
than convey the demand and associated legitimate threat of proceedings, the
harassment will be undue”.
Justice French commented that useful examples of situations that may give rise
to a contravention of the Act are set out in the ACCC guidelines, Debt
Collection and the Trade Practices Act, that is available on the internet at
http://www.accc.gov.au/consumer/fs-consumer.htm� and from all ACCC
offices.
For further information contact the ACCC through their web site or phone 02
6243 1111 or fax 02 6243 1199.
The ACCC’s publication “Undue harassment and coercion in debt collection”, May 1999, provides guidance as to the type of behaviour that in the ACCC’s view, would potentially amount to undue harassment or coercion. Examples provided include:
- A collector can assume that the convenient time for communicating with a debtor is after 7.30 am and before 9 pm local time at the debtors location, unless the collector is informed otherwise.
- A collector should not make more than three unsolicited (answered) telephone calls per week to a debtor, or more then 10 unsolicited telephone calls per calendar month to a debtor (including telephone calls where the debtor terminates the call), unless they can show a legitimate reason for doing so.
- A collector should not communicate directly with a debtor once the collector knows, or should know, that another person (e.g. financial counsellor) represents the debtor in the matter (there are further qualifications to this point).
Both Sides of the Fence
by Greg Mowle
In December 1999 I was awarded the title of Dux of the Institute of Credit
Management 1999 Certified Credit Executive program. I was honoured to achieve
this award. It may seem ironic that a financial counsellor could win the top
credit management prize. In my acceptance speech I stated that financial
counsellors and credit managers should not consider each other enemies but
rather should be working together to help all parties in the collection process
achieve their goals. A financial counsellor can assist a credit manger in the
collection process while at the same time ensuring that the debtor is treated
fairly with dignity. The purpose of this article is to help credit managers
collect unsecured consumer debts more effectively by showing them the
collection process from the debtor’s point of view. It will show that an
easing of creditor harassment benefits all parties.
Two incidents from my working experience 15 years apart illustrate the
frustration that the financial counsellor feels when they came across a
collector who is hell bent on pursuing a debtor and is not prepared to be
flexible in any negotiations. In 1984 I was working for a large well-known
finance company as a credit officer. This was prior to the Credit and Privacy
Acts and I was trained to simply “pick up the phone harass them (the
debtors) until they pay”. It was here that I first came across a
financial counsellor. A local agency had sent a letter concerning one of the
debtors in my ledger. They stated that the debtor was going through a temporary
change of circumstances. He had lost his job 2 months ago and was actively
seeking employment. The financial counsellor asked that I show compassion and
help the client in the short-term. I phoned the financial counsellor and stated
that although I was sympathetic to his plight he should have contacted me
earlier about his plight.�
We were prepared to defer one payment of his personal loan but that would be
the extent of our assistance. The financial counsellor replied that the debtor
initially believed that he would find a job quickly and so did not bother
informing his creditors. By the time the account was two payments in arrears he
was scared of what was going to happen to him and did not know what to say to
his creditors. He began to ignore reminder letters and messages to call
collection officers. I remember thinking that it was not possible for a grown
man to be so inept that he would not know how to face his creditors. The
financial counsellor requested that any communications go via their office as
the man was already under stress and any further pressure would not help his
employment prospects.
I replied that I had a job to do and if the arrears were not paid I would
continue collections proceedings. The motivation for me was that my performance
was rated by the number of 30 day plus accounts (or tags) I had in my ledger at
the end of the month. If this man was going to be a tag then I was going to do
whatever it took to make him pay. All personal characteristics fell away and to
me he was simply a potential tag.�
The remaining arrears were not paid and so I began to phone the debtor. He
explained that with rent and dependants there was no surplus money to pay
unsecured creditors. The financial counsellor intervened a few times to ask me
to ease off but I had been trained that you had to phone debtors “early,
hard and often” to make them pay before they paid someone else. I had
tunnel vision; nothing mattered except to eliminate as many tags as possible.
Eventually the account fell 90 days in arrears and my collection process was in
overdrive with constant calls to the debtor complete with threats of legal
action. I received the letter from the financial counsellor informing me that
the debtor had chosen to go bankrupt. I remember telling my colleagues:
“ All financial counsellors do is tell people to go bankrupt”
This scenario repeated itself over my 14-year career in credit management.
Financial counsellors were seen as troublesome and were to be sidestepped if we
were to place pressure on the debtor. As the bankruptcy advices became more and
more frequent so did my muttering of the phrase:
“ All financial counsellors do is tell people to go bankrupt”
Fast forward to 1999 and I was determined to halt the flow of bankruptcies in
my new role of financial counsellor. Over the years I had learned that most
debtors fall into the “can’t pay” rather that the
“won’t pay” category. Armed with new legislation such as the
S66 of the Consumer Credit Code I believed that I could make a difference and
set up a barrier between the creditor and the debtor and allow those clients
suffering genuine short-term change of circumstances to focus on rectifying
those circumstances. How naïve I was!
Very soon I had a client who fell into the above category. He had lost his job
6 weeks earlier and was unable to pay his unsecured creditors. The client
assumed he would not be long-term unemployed. The stress of not being able to
pay his debts was having a terrible toll on his physical and mental health. He
had contacted his creditors the week after he had lost his job believing they
would assist him. Unfortunately this was a signal to most of his creditors to
increase the pressure to keep paying as the collection officers knew they had
to hit him “hard, early and often” to ensure they were paid first.
He agreed to their demands for reduced but still unrealistic payments. As his
term of unemployment lengthened the payment arrangements faltered and
collectors began to aggressively follow up broken promises. Soon the client was
too scared to answer the phone or open letters. He came to me contemplating
bankruptcy after only six weeks of being unable to pay his creditors.
Knowing I had a clear case for help under S66 of the Consumer Credit Code and
that the client had exempt property and income I stepped in and advocated with
unsecured creditors. To my surprise many disregarded the plea for a moratorium
or token payments for two months. They said they had a job to do and required
regular payments. Knowing that a formal S66 application would take too long I
requested that the collectors at least direct all communication via myself to
allow the client to focusing on finding a job. As I told one collector “
if you keep hounding he will not get a job so he cannot pay you so everybody
loses”. Sadly these instructions were ignored as the collectors jostled
to be first in line for the meagre surplus money the client had left over after
rent.�
Eventually the strain of constant phone calls, left messages, threats of pay up
or else, Letters of Demand and tales of what the Court would do to his
possessions took their toll and he advised me he wanted to go bankrupt to take
advantage of the fact that all creditor contact would cease. He accepted my
information that even if the creditors did take legal action then he could
successfully apply for an Instalment Order but it was the emotional turmoil and
the continued creditor harassment that he simply could not put up with.
A financial counsellor cannot advise or tell a client what to do. They present
information, strategies, rights and options and let the client decide. Although
I knew this man was jumping in to bankruptcy far too early I had to accept his
decision. The client requested that I phone creditors who had been particularly
aggressive and inform them of his decision. The collector’s response
of:
“ All financial counsellors do is tell people to go bankrupt”
was poignant and illustrated with startling clarity to me the biggest problem
with today’s collection industry.
With bankruptcy numbers skyrocketing over the past ten years it is ironic that
the great majority of those filing for voluntary bankruptcy have high levels of
unsecured debt, are on a low income and have no non-exempt property. In other
words it is those debtors who have the least to fear and literally nothing to
lose that are being hounded into bankruptcy by creditors who have nothing to
gain. The great losers are the Australian public who pay for the high rate of
bankruptcies and Bad Debt write-offs in the form of higher interest rates,
higher insurance premium and higher taxes and levies. The great majority of
Debtors petitions are handled by the Official Trustee, a government funded body
and so a high number of petitions with no returns means that the Australian
taxpayer bears the cost.
The lesson is that unsecured creditors should gain an understanding of the
Consumer Credit Code, Bankruptcy Act and their appropriate state Civil Law. In
my experience almost 90% of debtors fall into the “can’t pay”
rather than the “won’t pay” category and if given short-term
assistance would be able to eventually repay their arrears. By easing off in
their collection techniques they can allow the debtor time to focus on
overcoming the change of circumstances. Financial counsellors can assist the
process by providing an honest and independent assessment of the client’s
financial position.
Many creditors believe that all debtors lose if they go bankrupt but the
Australian public absorbs a large part of that loss. In my experience creditor
harassment is the main reason why debtors are choosing to go bankrupt. Easing
off the aggression pedal will benefit creditors, debtors and Australian
society.�
Greg Mowle is a Financial Counsellor with Lifeline in Brisbane. He is also a former Credit Manager. He has had first hand experience in debt collection practices from both sides of the fence. He wrote this article for “Credit Management in Australia” and has been kind enough to allow us to reproduce it here.
QUEENSLAND
Warren Rowles has moved on from Townsville Community Legal Centre. Warren
who has provided great service as a financial counsellor to Townsville and
region goes onto Co-ordinate the Share House Youth Accommodation Program in
Townsville. He is replaced by Saskia ten Dam. Saskia has been student placement
at the Legal Centre in the past, is tertiary qualified and has extensive local
experience.
Sue Cook from Life Line Cairns had two daughters appear in the opening ceremony
at the Olympic games.�
NEW SOUTH WALES
The Consumer Credit Legal Centre (NSW) and the Financial Services Consumer
Policy Centre are organising a financial services conference on self regulation
in the financial services sector. It is scheduled for the 8th to 10th November,
at the State Library, in Sydney. The first day will consist of workshops on the
consumer credit code and lobbying and advocacy techniques. The second day will
look at the role and future of codes of conduct in financial services and the
third day will include a meeting for those in the financial services network
and other networking opportunities. For further information contact Catriona
Pike at CCLC, phone 02 9212 4135, fax 02 9212 4711 or email
Catriona_Pike@fcl.fl.asn.au.�
Credit Line Sutherland has recently moved into new premises in Sutherland. The
new premises are modern purpose built community agency accommodation.�
SOUTH AUSTRALIA
The South Australian Financial Counsellor’s Association (SAFCA) will hold their annual conference a little later this year on Thursday 8th and Friday 9th of November. The venue will be the Adelaide Hotel in O’Connell Street, North Adelaide with spectacular views of the city. Sue Heathcote, President of SAFCA, says guest speakers are lining up for an opportunity to present at the Conference so there should be plenty of stimulating and challenging dialogue.
VICTORIA
The Financial and Consumer Rights Council (FCRC) are now well settled in their new premises which are on level 13, Wales Building, 227 Collins Street in the heart of Melbourne, diagonally opposite the Town Hall. They also have a new phone number (03) 9663 2000 and fax (03) 9663 7677�
Jessica Goldsworthy, editor of the stimulating and highly respected Consumer Rights Journal informs us that the FCRC have recently had to make the difficult decision to conclude publication of the journal due to cost constraints. The final edition will be a double at the end of this year. Anyone wishing to contribute to this, please contact Jessica via the FCRC on email fcrc@vicnet.net.au� or fax. (03) 9663 7677�
NORTHERN TERRITORY
Dianna Bessell is the new financial counsellor at Katherine Financial Counselling Service. Dianna has extensive local experience and contacts and looks set to continue the high level of service provided by the agency.
WESTERN AUSTRALIA
Jacinta Laffer co-ordinator of the Financial Counsellors Resource Project (FCRP), reports that the booklet “When the Repo Man Comes” designed and written by Ian Macdonald with colourful illustrations by Sue Gregory, has proved to be such a hit with workers that another 3,000 have been ordered from the printers. The booklet explains the rights and obligations of consumers who have purchased cars under finance. If you would like to order copies please ring the FCRP on (08) 9221 94111 or email fcrp@iinet.net.au��
TASMANIA
Judy Cornwell reports that seven financial counsellors have been given brand new laptop computers through funding from ‘Breakeven”, the Gambling Counselling service. This has been an enormous help for them particularly when doing outreach work at another location. Now, says Judy, she can take her work with her and do it when she has some spare time instead of having to wait to get back to the office before she can start.
NEWS FROM AFCCRA (Australian Financial Counselling and Credit Reform Association)
Jan Pentland, Chairperson of AFCCRA, reports that the Australian National
Training Authority (ANTA) has funded a review of the Community Services
Training Package (CSTP) over the last few months. One of the outcomes of the
Review undertaken by Community Services Health Training Australia (CSHTA) has
identified counselling, including financial counselling, as a gap in the
CSTP.�
In phase 2 of the Review for ANTA which includes development of draft
competencies for financial counselling, the FCRC in partnership with Delaney
Associates, has submitted an expression of interest (EOI) to undertake this
work. Delaney Associates has the required expertise in developing training
package materials within the ANTA frameworks and FCRC believes it has the
necessary industrial knowledge and expertise on financial counselling.�
This is an Australia wide project and Jan Pentland as Chair of AFCCRA, has
notified all states and territories of FCRC’s expression of interest.
Feedback to date is supportive. A comprehensive Australia wide consultation
process is part of the proposed project plan.�
The outcome will be national competency standards for financial counselling.
Registered training providers including the TAFE system, will then develop
training packages to meet the competencies.�
If anyone has any queries about any of the above, please contact Jan Pentland
on (03) 9879 8760 (W) or (03) 9836 1958 (H) or 0407 042 483.�
Any contributions to “Round Up” would be most welcome. Our aim is to include some news from each state and territory. Contact Jean Lewis on 1800 647 409 if you have anything you would like to have included. Alternatively, you can email to: jean.lewis@wesleymission.org.au
Notes and Notices
General Insurance Conference
The Insurance Enquiries & Complaints Service is holding its 4th annual conference from November 13 to 14 in Melbourne. The key note speaker is Walter Merricks, Chief Ombudsman, Financial Ombudsman Service (UK). Code of Practice and Privacy Compliance issues are included on the agenda and there is provision for participation. The two day conference cost is $517. For further information contact Rae Cooper on 03 9613 6359.
Telecommunications Conference
The Consumers Telecommunications Network is holding a conference on November 24, 2000 at the Masonic Centre in Sydney. Topics include; mobiles in the new millennium, protecting quality in new services and going global. Warwick Smith, ACIF chairman, will open the conference. Inquiries to ctn@ctn.org.au
ACCOSS Conference
ACOSS Congress 2000 is on November 16-17 in Canberra. A broad range of speakers will guide participants in examining three inter-related streams: Renewing welfare, Rethinking relationships and Reshaping social policy. For further information contact Gill Whan 02 9310 4844.
Consumer Rights Journal
The July/August 2000 issue of the Consumer Rights Journal is up to the normal high standard. It focuses on Cultural Diversity, the EFT code and E-commerce issues. If you don’t subscribe to it you would be well advised to do so, contact the FCRC on 03 9614 5433 or email fcrc@vicnet.net.au
Bankruptcy Journal
The latest edition of ITSA’s New Directions in Bankruptcy is out and is full of very relevant articles on bankruptcy. Also available is a special edition on an Analysis of Debt Agreements. Your can obtain New Directions free of charge, contact Peter Mackay at ITSA on 02 9581 7866.
Telecommunications Report
The 1999-2000 Annual Report of the Telecommunications Industry Ombudsman was
released on October 5, 2000. The Annual Report is a summary of complaint
statistics and major issues handled by the TIO in the last financial year. The
report includes case studies, detailed statistics and explanations of the main
areas of consumer complaints about telephone and internet services.
The report reveals a growth in customer transfer complaints, including
slamming, a result of the increase in local call resale; continuing high levels
of complaints about delays in providing new lines and repairing faults; and a
significant increase in complaints about the staff of telecommunications
providers. Copies of the report can be obtained by phoning 03 8600 8700 or
visiting www.tio.com.au�
The paradox of modern society
- We have made more money - but have much less.
- We have built bigger houses - but have smaller families.
- We have more conveniences - but much less time.
- We have multiplied out possessions - but have greatly reduced our values.
- We have cleaned the air - but polluted the soul.
- We have more educational degrees - but far less common sense.
- We have learned how to make a living - but not how to make a life.
The Law Matters
Hardship Variations under the Consumer Credit Code.
By Chris Joyce, Solicitor, Credit Helpline NSW
Often a debtor cannot meet his/her obligations under a credit contract
because of illness, unemployment or some other very reasonable excuse. In such
situations he/she may apply to the creditor for a variation under s.66 of the
Consumer Credit Code, see example letter below. If the creditor agrees to the
variation then it must give to the debtor a written notice setting out the
particulars of the change. A Section 66 application does not actually reduce
the amount that will be paid under a credit contract but rather postpones the
payments.�
I believe that before a Section 66 application is made the debtor should
consider negotiating with the creditor for a reduction in both the principal
owing and the interest being charged.�
Under section 68 if the credit provider does not change the credit contract as
requested in the debtor’s section 66 application then the debtor may
apply to the court/tribunal to change the credit contract accordingly. The
court/tribunal may after hearing everyone change the contract as set out in
section 66 and may make such other orders including staying any enforcement
proceedings as the court/tribunal sees fit.�
If you would like any further information on hardship applications please
contact me on 02 9951 5544.
Dear Sir/ Madam
Re: (client’s full name)
Loan contract No:�
We are applying to you on behalf of our client [client’s name] for a
variation of the above loan contract pursuant to section 66 of the Consumer
Credit Code 1996. Our client seeks to change the terms of the above contract
under section 66 (2) by [in only one of the 3 following ways]
extending the period of the contract for *** months and reducing the amount of
each payment due under the contract accordingly to $**** per
(week/fortnight/month) without a change being made to the annual percentage
rate.
postponing the payment due to you on **/**/** so that it will now be due on
**/**/** and that the further payments due to you on **/**/**, **/**/**,
**/**/** etc will now be due to you on **/**/**, **/**/**, **/**/** etc.
without a change being made to the annual percentage rate
extending the period of the contract from **/**/** to **/**/** and postponing
during the period **/**/** to **/**/** the payments due under the contract
without a change being made to the annual percentage rates i.e. the payment due
on **/**/** is postponed so that it is now due on **/**/**. The payment due on
**/**/** is postponed so that it is now due on **/**/**.
In support of our client's application we note that : [give details of the
illness, unemployment or other reasonable cause which causes the client to be
unable to discharge his/her obligations under the terms of the contract e.g. at
the time of entering the contract our client was employed full time as clerk
with Chris Joyce Industries Pty Ltd.. This work initially involved a lot of
overtime each weekend. Three months after signing the contract with you our
client lost his/her job due his/her employer being placed into receivership.
After being unemployed for 4 months our client commenced work as a storeman
with Egg Marketing Board, Lidcombe where he/she is still employed.].
[ Give details of all income and expenditure to show that the client will be
able to fulfill his/her obligations under the proposed varied contract e.g. our
client’s current net income is $***.** per week. This consists of wages
of $***, (etc) Our client’s current expenses are $*** list all
expenses].
As can be seen from the information provided above, our client will be able to
discharge his/her obligations under the contract if the changes listed above
are agreed to by you. We ask that you note the hardship variation provisions at
Section 67 and 68 of the Consumer Credit Code. We enclose herewith an authority
from our client for our office to act on his/her behalf.
Please reply in writing to the above address.
Superannuation Access Issues
By John Berrill, Partner, Maurice Blackburn Cashman
INTRODUCTION
One of the most asked questions of financial counsellors is when and how can I
get my superannuation?
Eight years after the introduction of compulsory employment-based
superannuation, for many people superannuation represents their largest and
often only form of savings.
Access to superannuation is therefore crucial for those with financial
problems.�
For people with disabilities, access to superannuation and insurance disability
benefits is also particularly important.
SUPERANNUATION BENEFITS
Most superannuation funds consist of contributions paid by the fund member
and/or their employer and disability and death benefits, usually insurance lump
sums.
Since 1992, work superannuation has been compulsory with employers required to
pay contributions currently at 8% of salary into a superannuation fund for
their employees if they earn at least $450.00 per month.
If an employee earns less than $450.00 per month or if the employee is over 70
years of age or under 18 and working less than thirty hours per week,
superannuation is not compulsory.
SUPERANNUATION PRESERVATION RULES
Personal contributions paid into a superannuation fund up to the 1st of July
1999 may be paid out when a member leaves the superannuation fund. However,
member contributions paid after the 1st of July 1999 and all employer
contributions must usually be "preserved" in a superannuation fund or Approved
Deposit Fund until retirement after age 55 (or up to age 60 if the member is
born after June 1960).
Clients with multiple superannuation funds with preserved benefits should
consider whether to consolidate their funds. In deciding whether to consolidate
funds, it is important to compare crediting interest rates of the funds as well
as administration fees and any exit fees.
As a general rule, most "industry" funds will have low levels of fees and
charges and reasonable interest rate returns.
EXCEPTIONS TO THE PRESERVATION RULES
4.1 Severe Financial Hardship�
If a client has been on social security payments for at least six months and
can satisfy the superannuation fund trustee that he/she is unable to pay "the
reasonable and immediate family living expenses", between $1,000.00 and
$10,000.00 per annum can be released from preserved benefits in a lump
sum.
Clients over 55 years and nine months of age can get a release of all preserved
benefits if they are not in any gainful employment and have been receiving
social security payments for at least 39 weeks.
Applications must be made to the superannuation fund trustee and should be
accompanied by:
(i) A letter from Centrelink confirming the period of social security
payments.
(ii) Proof of the financial hardship such as income, asset, expense and debt
summaries and accounts.
(iii) A Statutory Declaration that the person is not�
gainfully employed (if over 55 years and nine�
months of age).
4.2 Compassionate Grounds
A person may apply to the Australian Prudential Regulatory Authority (APRA) for
the release of some or all of the preserved benefits on very limited
compassionate grounds namely:
(i) To pay for medical treatment or transportation of the client or a
dependant.
(ii) To make loan repayments of up to three months (plus twelve months of
interest) to prevent a mortgagee sale of the client's home.
(iii) To pay for modifications to a severely disabled client's or dependant's
residence or motor vehicle.
(iv) To cover palliative care expenses.
(v) To meet the palliative care, funeral, burial or like expenses of a
dependant.
(vi) Any other similar expenses approved by APRA.
Any application to APRA should be accompanied by:
(i) Details of the expenses and quotes/accounts.
(ii) Medical certificates as to a severe disability or the need for
treatment/palliative care.
(iii) Proof that the client cannot afford the expense such as a summary of
income, assets, debts and expenses.
4.3 Permanent Incapacity
If clients are permanently incapacitated for "suitable" employment, they can
apply to the superannuation fund trustee for the release of all the preserved
benefits.
To be considered permanently incapacitated, a client doesn't need to be unfit
for any work, just any suitable work given the limits of his/her education,
training or experience. For example, if a client has a bad back and has only
ever worked as a labourer or process worker, it wouldn't matter if the doctors
said that he/she could do office work if he/she doesn't have the training or
experience for that work.
It would be appropriate to provide medical reports from treating doctors to
support a claim or at least medical certificates which confirm:
(i) The nature of any injuries/illnesses.
(ii) When they were first diagnosed.
(iii) The period of incapacity.
(iv) That the client is "unlikely to ever again be gainfully employed in a job
for which he/she is reasonably qualified by education, training or
experience".
4.4 Disability Benefits
Financial counsellors should also be aware that many clients with disabilities
will also be able to claim superannuation disability benefits over and above
the preserved contributions.
Disability benefits are usually insurance lump sums or monthly payments.
It is important to check whether the fund members had disability cover when
they ceased work even if they have already been paid out and even if that was a
long time ago.
Many clients on CentreLink payments will be able to claim superannuation
disability benefits.
4.5 Other Grounds
Trustees can also release preserved benefits if:
(i) The total is less than $200.00.
(ii) The member dies.
(iv) The member is temporarily incapacitated.
SUMMARY
The rules about access to superannuation benefits have changed many times over
the years although the policy setting has remained the encouragement of
retirement savings by preserving most superannuation benefits until minimum
retirement age.�
However, there are many instances in which people with financial problems and
disabilities will be able to access their superannuation benefits to provide
financial relief.
It is important financial counsellors are aware of when clients can access
their superannuation and disability benefits and also to be aware of any
changes in the law. We will endeavour to keep you informed of developments.
Written by John Berrill, Partner,�
Maurice Blackburn Cashman Solicitors�
Tel: (03) 9345 2742
Understanding the client with Bipolar Disorder
By Wayne Warburton (Credit Helpline, NSW)
It is not unusual for the financial counsellor to encounter clients with the
manic-depressive condition now known as bipolar disorder. Such clients have
often amassed large debts during the ‘manic’ phase of the disorder,
commonly borrowing or spending large amounts of money with the strong belief
that they are invincible and immune to any possible consequences. Counsellors
who have strategies for identifying and advising depressed clients may feel
less confident when counselling a client with bipolar disorder, particularly in
relation to the manic part of the manic-depressive cycle.
What is mania?
During the manic phase, a bipolar
individual usually feels joy, elation and euphoria, and experiences greatly
heightened pleasure in almost every activity. This elevated mood is so
pronounced that some bipolar patients have described periods of mania as being
like living ‘a continuous sexual orgasm’. They may become
incredibly active, often sleeping less than 2 hours a night for extended
periods, and may develop grandiose plans, believing that they can achieve
anything they desire. Speech may become rapid or incoherent, because the
individual is trying to express so many exciting ideas at once. The manic
person often feels invincible, and will commonly engage in many high risk
activities, such as uncontrolled spending, unprotected sexual encounters and
behaviour which is dangerous to their physical wellbeing.�
At the height of a manic episode, it is not unusual to see psychotic symptoms
such as delusions (strong beliefs that are misrepresentations of reality; often
delusions of exaggerated self importance or persecution by other people) and
hallucinations (seeing or hearing things which do not exist; in bipolar
disorder, the hallucinations are often voices). Although the manic person
usually feels unbounded confidence, it is also common for that person to also
feel anxious, irritable and somewhat depressed, with the irritability sometimes
becoming extreme towards the end of the manic episode.
Related disorders and Statistics.
There are three
disorders of a bipolar nature. Bipolar I disorder is characterised by major
depressive episodes interspersed with severe manic episodes; Bipolar II
disorder is associated with major depressive episodes interspersed with
hypomanic (mild manic) episodes; and Cyclothymic disorder is characterised by
alternating mood elevation and depression, at milder levels. The key
identifying feature of bipolar disorder is the tendency of manic episodes to
alternate with depressive episodes.
Bipolar disorder usually first occurs between 18 and 22 years, is rarely first
developed after the age of 40, and occurs in roughly equal numbers between men
and women. The lifetime likelihood of developing bipolar is estimated to be
around 1.3%. Typically, bipolar disorder is a lifelong problem, with manic
episodes generally lasting for about 6 months at a time without treatment, and
depressive episodes lasting somewhat longer. Suicide rates amongst people with
bipolar disorder are extremely high, with estimates ranging from 9 - 60%, and
averaging about 19%.�
Possible causes
Genetic research into twins and
relatives of those with bipolar disorder suggests that a predisposition to
develop bipolar disorder may be inherited genetically. However, some people
will go on to develop the disorder while others may not. Stressful life events
may trigger manic-depression in some people, and mania is more common in the
spring. There is some evidence that people with bipolar disorder tend to have
neurotransmitter imbalances in their brain, but research into this has found
conflicting results.�
Treatment�
Anti-psychotic drugs are used to calm the
mania and lithium carbonate is used to stabilise mood, both during bipolar
episodes and as a preventative between episodes. Psychotherapy is commonly used
in conjunction with medication, and some research suggests that having the
social support of others around you can also be helpful.
Episodes of mania are far from straightforward, and as a counsellor, it is
important to be aware that:
Clients during mania usually do not believe that they have a problem, because
they often feel great. Suggestions to see a mental health professional will
usually be disregarded, and in order to minimise the chance of further
self-destructive behaviour from the client, the counsellor may need to be
persistent in their encouragement for the client to seek help.�
The client will usually present to a financial counsellor during a depressed
state. It is important not to judge how the client will behave in the future
from their depressed behaviour, because bipolar disorder is generally cyclic
– the client will in all likelihood have another manic episode in the
future and behave very differently then. This makes negotiations with creditors
very tricky, and it may be advisable to:
a) Be fully honest and open with creditors about the nature of your
client’s disorder (with the client’s permission)�
b) Discuss the possibility of putting a notation on the clients Credit
Advantage Ltd. file requesting that no further credit should be given.
c) Because the suicide rate among people with bipolar disorder is so high, any
suggestion of suicide by a bipolar client must be taken very seriously.
d) As a counsellor, you may see the client’s behaviour during mania as
self-destructive, and feel that the best outcome is a successful controlling of
the disorder, through a therapeutic intervention, such as drugs and/or other
treatment. Remember that your client may not see things in the same way.
Bipolar individuals who are in the depressed phase may yearn for the pleasure
of being in the manic phase again, and try to precipitate a manic episode
deliberately by reducing their medication or engaging in other behaviours which
they know have triggered mania in the past. Thus, while the counsellor may
believe that management of the disorder is in the client’s best interest,
the client may be actively working towards a different outcome.�
Referring and finding further information.
If you are concerned about your client’s mental health, a referral to the
client’s local GP and/or Community Mental Health Centre is appropriate.
If the counsellor has reason to believe that their client is a danger to
themselves (or others), then a call to the local mental health crisis team may
be warranted.
Further information can be obtained from the Schizophrenia Fellowship or the
following web address: http://www.sfv.org.au/facts_5.htm#FACT SHEETS IN THIS
SERIES. There are also various books which provide excellent information on
bipolar disorder. The one I found most accessible (and from which I have
derived many of the statistics and facts noted here) is called ‘Abnormal
Psychology’ by Barlow and Durand, and is published by Brooks Cole
(California).
Wayne Warburton is studying psychology at Macquarie University and has a specific interest in psychopathology, for which he has won awards in his studies.
In the Media
Banks Have No Social Obligation
Banks did not believe they had a social obligation to the community, a federal
parliamentary inquiry into fees on electronic and telephone banking was told
yesterday.
The acting chief executive of the Australian Bankers’ Association, Mr
Jeff Oughton, told the inquiry in Adelaide that banks considered themselves
good corporate citizens. But when questioned by Victorian Labor Party Senator,
and joint committee member, Stephen Conroy, as to whether he thought Australian
banks had a social obligation, Mr Oughton replied, “no”.
The inquiry saw a number of industry and consumer groups deliver their views on
fees in electronic and telephone banking, with real time disclosure of fees one
of the main areas of disagreement.�
Australian Financial Review, August 24, 2000.�
Credit Growth Lifts Bank Revenue
Full-year earnings of the major banks will receive a boost from the record
levels of credit growth in the Australian economy, with large issuers of credit
cards, such as ANZ, set to benefit most.
While credit growth has been cited by the Reserve Bank of Australia as a reason
for increasing official cash rates, it also improves the outlook for banks, at
least in terms of interest income.�
Australians now owe more then $650 billion, according to Reserve Bank of
Australia figures. During the last financial year, total credit figures grew by
a four year high of 13.1 per cent. Banks are increasingly emphasising fee
income but interest income continues to underpin earnings.
Australian Financial Review, August 1, 2000
Home loan with fries
It’s been in the pipeline for quite some time but finally Commonwealth
Bank and McDonald’s Australia are set to announce a “french fries
with home loan” deal. CBA’s
head teller (and we suspect Big Mac lover) David Murray has apparently given
the okay for the burger chain to offer some CBA banking products over the
counter.�
Australian Financial Review, September 5, 2000.
GE Capital to expand
GE Capital will expand into the non-prime mortgage market later this year,
adding to its current activities in cards, auto finance and insurance
business.
Non-prime lending offers home loans to customers who would otherwise not be
able to get a loan. Often this is due to past credit problems, self or casual
employment or an insufficient track record or savings pattern. Higher interest
rates are charged to reflect the higher risk profile of the business.
Bankcard and marketing director of GE Capital Finance Australia, Ms Karen
Donaldson, said the local mortgage market was saturated, but there was a gap in
the market for consumers who find it difficult to access finance.�
Australian Financial Review, August 30, 2000.
Prospering credit card providers
Card providers in Australia are benefiting from boom conditions, spurred on by
a strong growth in credit levels, fast growing internet use and the push by
banks to encourage customers to switch to electronic transactions.
But they are also under siege, with regulators and governments, locally and
offshore, inquiring into their business practices.�
The US Justice Department is taking on the card giants in an anti-trust case.
The department alleges that Visa and MasterCard bully their competitors and
harm the public. In Australia, the card industry is the subject of three
inquiries. The Australian competition and Consumer Commission is investigating
interchange fees between the banks, and a federal Senate Committee is
investigating fees charged on electronic transactions.�
Australian Financial Review, August 14, 2000.
Teleconference - Small Business Issues�
by Kirsten Horne
The below is a summary of key points raised during the teleconference on 4
September, 2000. It is not meant to be an exhaustive treatment of the
particular subject matters.
1. Introduction�
Financial Counsellor participants came from wide a range of backgrounds with
respect to small business dealings. In addition the teleconference had guest
participants being;
· Counsellors from the South Australian Small Business Emergency
Hotline.
· Pat McKinnon – GST Compliance Field Officer, Australian Tax
Office
Thank you to Barrie, Sergio and Pat and also to Steve Snelgrove (NSW) and Brian
Clarke (VIC) and Charles Dawborn (VIC) who where not able to participate in the
teleconference but gave valuable input to the agenda in conversations
beforehand.
2. Most Common Presenting Problems and Mistakes made by Small
Businesses.
Asking for help too late.
Poor or no record keeping. Not reading invoices and taking paperwork seriously.
Not allocating time for paperwork.
Poor cash flow control/management.
Failure to seek legal and/or financial advice before setting up the business.
Usually this is in an ill conceived attempt to save money.
Business documents not set up properly.
Relationship problems with spouse and/or business partners who are often
family.
No consideration and allowances made in the set up of the business for
holidays, long hours of work, weekend work, agreements on who puts up initial
and back-up capital.
Legal Action pending
Businesses not being aware of what resources and reference bodies are out there
for them.
3. GST, the ATO and Small Businesses
During the lead up to the teleconference a number of counsellors voiced their
concern with respect to handling GST queries for consumer and small business
clients. Our guest participant Pat McKinnon is an ex-financial counsellor and
currently a GST Compliance Field Officer for the ATO. Pat advised that the ATO
had appointed 3000 similar positions nationally and that these people where
available to all people dealing with GST compliance (generally businesses) and
could be contacted via a national number. The number is 13 24 78.�
Pat advised that Financial Counsellors with concerns about GST might consider
contacting their field officer and arranging a visit. Pat advised that around
5pm was a good time to ring the number and it would be wise to contact them as
soon as possible as it is expected to become a lot busier after 30
September.
In addition to the GST information Pat also drew the group’s attention to
the ATO’s BIS Start program which includes a number of courses for small
business including record keeping etc. He also suggested a CD Rom set entitled
E Record which can be obtained from the ATO on the same 13 24 78 telephone
number.
4. Where does the role for Financial�
Counsellors begin
and end ?�
What possible approaches can we make�
when dealing with Small Business clients?
Generally it was agreed that it was not the role of the financial counsellor to
become involved in all aspects of the small business but rather that financial
counsellors had a role in supporting clients in accessing appropriate referrals
and thereby assisting them to identify the extent of problems and appropriate
actions.�
Many participants noted that more often then not the business was already
failed by the time the client presented. Nevertheless it was noted that even
then there is more than likely a need for specialist involvement with correctly
closing the company/business down eg advice on tax, directors (if any)
liability etc.
Important and useful bodies for referral.
Generally participants had experienced good support from ITSA , even where the
questions were not directly related to bankruptcy. Other services used
included:
ASIC (Australian Securities and Investment Commission) for company related
issues,�
BECs (Business Enterprise Centres) which are a national mentor type body
available to small businesses. Located regionally. Generally agreed that they
vary in how good they are dependent upon the experience of the mentors etc.
Also noted that they are not really set up for helping failed/failing
businesses. More for the set up stage.
ATO See point 3 above.
Contacts among local accounting services. Can be difficult to cultivate as more often than not the client can not pay them. Can be useful for general referral. Ideally the client’s accountant is an appropriate referral (after having considered the problem and hopefully with some specific questions in mind) but this can sometimes be a problem where the accountant is a creditor and unwilling to give further time to the client.
