From where we sit…..
It was heartwarming to receive financial counsellors’ response to
Wayne Warburton’s recent article in the last edition of Sharkwatch on
’The forgotten duty of care: Looking after oneself’. It seemed to
strike a deep chord, with many counsellors expressing their thanks to Wayne at
a recent FCAN meeting in Sydney.�
One counsellor remarked that some of the signs described in the article had
alerted them immediately to their own problems which had made them step back
and rethink their coping strategies.
Talking to counsellors all around Australia, the common issue that comes across
is the unrelenting demand placed on financial counselling services and the toll
that this can take on counsellors themselves.�
So please, stop once in a while and think carefully about yourselves and how
much you are taking on. Take a break, do something just for yourself and get
the balance right.
Wayne is busy writing another interesting article along similar lines of
counsellor care—so look out for future editions …….
Ed
Accessing Superannuation ON AN AGE BASIS
by Heather Webster
When can you access your superannuation on the basis of age**?
A member may access their benefits upon retirement, subject to the governing
rules of the fund. Retirement depends on a persons age and employment
intentions. A retired person cannot access their preserved benefits before they
reach preservation age. This is dependent upon their birth date.
Date of birth
Preservation age
Before 1/7/1960
55 years
1/7/60 – 30 /6/61
56 years
1/7/61 – 30/6/62
57 years
1/7/62 – 30/6/63
58 years
1/7/63 – 30/6/64
59 years
After 30/6/64
60 years
When a member has reached their preservation age but is less than 60 their retirement occurs when:
- An arrangement under which the member was gainfully employed has come to an end. This may have occurred at any time including prior to their preservation age; and
- The trustee must be reasonably satisfied that the member never intends to work in excess of 10 hours per week again.
When a member has reached age 60, their retirement occurs when their gainful
employment ceases after they have reached 60. In this case the trustee does not
need to form an opinion on the members intentions to seek future gainful
employment.
When a member, aged 60 or more, is in two or more employment arrangements at
the same time, the cessation of one of the employment arrangements is the
condition for release in respect of benefits other than those that relate to
the continuing employment.
All this information and much more is available through APRA’s
website.
www.apra.gov.au�
- Click on Insurance & Superannuation (shown in blue on the left hand side of page)
- Click on Legislation. Circulars & complaints
- Click on circulars
- Click on superannuation
- Click on IC2
**Please refer to your back copy of Sharkwatch October 2000 for a detailed account of the rules governing access to Superannuation through Hardship, Incapacity etc.
Heather Webster is a financial counsellor with Credit Helpline in Sydney.
QUEENSLAND
Kate Keating and Lola Mashado from Financial Counselling Services (Qld) are
off on a fact finding tour this month to Canada and parts of the USA. They have
organised to visit and meet up with financial counsellors (called Credit
Counsellors) and associated services throughout their tour and hope to bring
back useful information and ideas.
Margaret Clements from Rockhampton and Saskia ten Dam from Townsville are also
on the move soon. They will be running a two day education program next month
in Mackay to train the Lifeline telephone counsellors there in the basics of
financial counselling. This will give some badly needed support for Saskia and
Margaret as the only two financial counsellors in an area covering the whole of
central Queensland.
NEW SOUTH WALES
Wagga Wagga Financial counselling service has a new counsellor—Tony
Gale. Tony brings a wealth of knowledge to financial counselling after working
in the world of finance for over twenty years. He has been doing a training
course with Kevin Howard in Bathurst for the last six months, working towards
his accreditation.
Ryde Eastwood Financial Counselling Service will be losing one of their
foundation members next month. Margaret Kilby is retiring. She has been
involved since the service first started in 1986 and shares the position of
co-ordinator with Narelle Brown. Margaret has worked tirelessly during her
fifteen years and has made an enormous contribution not only to Ryde Eastwood
but to financial counselling generally in NSW. She was on the executive of FCAN
for a long spell as Vice-President, Membership Secretary and Secretary.
SOUTH AUSTRALIA
Changes to funding have meant that the Roma Mitchell Community Legal Centre
in North East Adelaide is closing on June 30th. This has had an impact on the
financial counselling service there headed by Susan Lilley and her group of
volunteers. However, just before going to press, Susan heard that the service
will continue to operate from the Northern Metropolitan Community Health
Service in Norwood which has been a co-location for the financial counselling
service covering the Tea Tree Gully and Ingle Farm sites since 1992.
Kevin Woon in Coober Pedy is also planning an education program for years 9
through to 12 at the local school. This last month has seen him busy working on
a comprehensive information booklet which has been designed to explain the
basics of good money management in an interesting and fun way to young people
who are about to step into the world of credit and mobile phones.
VICTORIA
The Financial and Consumer Rights Council of Victoria are undergoing some
changes this month with their Executive Director of five and a half years,
Barbara Romeril moving into a new role with the Community Child Care
Association of Victoria. Sharon Barker who has herself been closely involved
with FCRC for over four years, will take over.�
The FCRC are also moving offices this month to the Wales Building, cnr Swanston
& Collins St, Melbourne. Their phone number remains the same.�
The annual conference of the FCRC takes place just outside Melbourne in the
beautiful Yarra Valley this year at a conference centre of the same name. It
will be held from Sunday 22nd July through to Wednesday 25th July with Keynote
speaker Rod Quantock, well known comedian and advocate for social justice. The
theme for this year’s conference is “Staying Connected” Chris
Field from the Consumer Law Centre Victoria will be speaking on Pay Day Lending
and workshops on current consumer issues and concerns will be held over the
four days.
NORTHERN TERRITORY
The five financial counsellors headed by Cheryl Cryer, who make up the
Northern Territory team, Peter Carratt (Darwin), Dianna Bessell (Katherine),
Kevin Rolfe and Judy Blundell (both from Alice Springs) held their first Annual
Conference this year in Darwin at the Anglicare Centre on the 25th and 26th of
June. Cheryl Cryer organised an interesting and diverse two days with Keynote
Speaker George Georgio, Official Receiver from ITSA , Adelaide, and other
speakers from the ACCC, the Banking Industry, Telstra and the NT
Ombudsman.
Kevin Rolfe, who works for the Tangetyere Council in Alice Springs has made
enormous inroads over the years in his dealings with aboriginal issues in
relation to social security issues particularly. He has been a fierce advocate
in dealing with injustice on their behalf and his reputation for dealing
swiftly and promptly with errors in social security and other government
departments is well known.�
One such case recently was a young Aboriginal whose wages had been garnisheed for the last eighteen months as Abstudy declared he owed them $5,000 and had not completed the course. (The client proudly showed Kevin a photo of his graduation with him being congratulated by the Course Co-ordinator). With just one phone call Kevin had the decision reversed and also obtained a full recovery of the money for his client and a formal letter of apology.
WESTERN AUSTRALIA
The Financial Counselling Association of Western Australia will be holding
their annual conference from the 3rd to the 7th of September this year, in
Fremantle. The theme of the conference is “Future Directions: Financial
Counselling in the new millennium” Speakers so far include: Val Riley who
will talk about working with aboriginal clients and aboriginal culture, Angela
James from Fines Enforcement and a speaker from the Child Support Agency to
give an update.
Anita Seery and Cheryl Condon share the work at the Murchison Financial
Advocacy Services in Meekatharra and encounter a variety of clients in this
remote area. Recently Anita had a client who, because of a debt with the Water
Board, had had their service cut to a trickle. The client had a young boy with
a disability and was bathing him in a garbage bin. With Anita’s hard work
she successfully managed to get the decision overturned and was delighted when
the client phoned to say the water was back on and the family could once again
use the shower.�
TASMANIA
Judy Cornwell and her small but hardworking team of financial counsellors all recently attended a workshop on working with same sex and transgender clients and colleagues. The workshop was conducted by The Working it Out group from Hobart.
NEWS FROM AFCCRA (Australian Financial Counselling and Credit Reform Association)
Jan Pentland reports: In terms of news about AFCCRA, the latest edition of the 'AFCCRA News' is currently being distributed through the AFCCRA state representatives so please look out for it.
Is Bankruptcy a Debt Recovery Tool?
by Greg Mowle
At the recent Australian Monopoly championship the eventual winner outlined
his winning philosophy: “Be ruthless and bankrupt all the other
players”.
At the 2000 National Bankruptcy Congress insolvency practitioners and credit
managers expressed the same sentiments. To the financial counsellors at the
Congress it appeared these players do not realise they are not playing a board
game but are operating in a real society and as such their actions have
devastating effects on the community as a whole.
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 premiums and higher taxes and levies.
The purpose of this article is to rebut the arguments propounded by insolvency
practitioners and credit managers (referred to from here on as “debt
collectors”) as to why bankruptcy is a legitimate debt collection
tool.
So why do debt collectors continue to threaten debtors with bankruptcy?
Spite
Many debt collectors cannot stand the thought that
someone is not paying their bills.�
This implies that all debtors are bad all the time. Life has its vicissitudes.
All of us will go through some type of temporary change of circumstances at
some point. The #1 trigger for bankruptcy is unemployment, a condition that
will touch almost all Australians at some stage in their lives due to the
dramatic changes in work and employment over the past 20 years. The days of
joining an employer “for life” are long gone. Lenders who lend to
people on an unsecured basis must realise that the borrower will be unemployed
for period or go through a period of little or no earnings.
Ignorance
Many debt collectors, especially those in the frontline of collecting consumer
debts, simply do not know what bankruptcy entails. Most have outdated or
mythological beliefs about what will happen to a debtor if they go bankrupt.
Many believe the debtor will go to jail or will have to hand over a minimum of
half their income (including government benefits), and will suffer the ignominy
of a van pulling up outside their house and men taking all their meagre
possessions. I was into my 10th year of credit management and was astounded to
learn that a single person was able to earn up to $30,000 a year before having
to make contributions.�
Shareholder Pressure
With the squeeze on to return
increasing profits and hence dividends to shareholders bad debts need to be
written off quickly. As the volume of credit being written increases, credit
managers are taking the gamble that bad debts will not increase at the same
rate as sales. The quickest (and cheapest) way to prove that a debt is
“bad” is if a debtor advises a bankruptcy file number. The quickest
way to force a debtor into bankruptcy is by increasing harassment and refusing
all cries for short-term assistance until the debtor chooses bankruptcy to stop
contact from creditors.
A Better Return?
The main reason put
forward by debt collectors for rejecting settlement offers is that, if it is
not above the entity’s tax rate, or insurance return, then it is not
viable to accept the offer. The belief is that it is easier to accept a tax
deduction equivalent to 36% than a full and final settlement offer of 10% when
the return in bankruptcy will be zero. This is not correct. It is true that
section 25-35 of the Income Tax Assessment Act allows a deduction for a bad
debt, but it is allowable for the portion of the debt that is not recoverable.
Any genuine offer by the debtor will boost the creditor’s return, as
demonstrated in this simple example using a 36% tax rate:
(1) DEBT $10,000
OFFER $1,000 = 10%
The debt collector rejects the offer believing it delivers a 26% net loss. They
write off the whole debt. The return is $3600 ($10,000 * 36%).�
(2) But if the $1000 offer were accepted this is the result on
the profit sheet:
SETTLEMENT $1000
TAX DEDUCTION @ 36% * $9000 = $3240
TOTAL $4240
The creditor is $640 better off or has 18% more funds available to pay their
debt collector’s fees !!!
Debt Collectors Get Paid Regardless of Return
Imagine
the effect on bankruptcy numbers if a debt collector’s remuneration was
tied to the expected return from bankrupting the debtor? The answers to the
following questions are obvious:
Does the debt collector get paid in accordance with the return from the
bankrupt’s estate, so that, if the return is nil the client does not have
to pay; or
Does the debt collector’s fees get paid regardless of the return from the
bankrupt estate?
When the debt collector is assured of payment regardless of the return there is
no contemplation of the detrimental effect on the future of the debtor and the
consequences for society of escalating bankruptcy numbers.
Label Them Forever
Should a person be permanently
labelled for a temporary change of circumstances?
Our legal system supposedly ensures that persons convicted of a crime pay a
penalty, be it a fine or jail term, and are allowed to get on with the rest of
their lives. Often, however they will be labelled a “criminal”. To
debt collectors, the same punishment must be meted out to debtors. For the
“crime” of becoming unemployed and thus being unable to repay their
debts at one point, they must wear the tag of “bankrupt” for the
rest of their lives. They suffer loss of face and self esteem. Their ability to
acquire basic services such as renting a property or having the telephone
connected, is affected for the rest of their lives. Their employment prospects
are hampered and they may ultimately have to be subsidised by taxpayers through
the social security system.�
Auditor Requirements
Debt collectors also put forward
the reason that a bankruptcy is needed because “the auditor requires it
to be done” in order to gain a tax deduction. This is not correct. Under
section 25-35 of the Income Tax Assessment Act 1997 to gain a deduction you
merely have to show that the debt is bad. Tax Ruling 92/18 on section 25-35
states that a debt is bad if “on an objective view, there is little or no
likelihood of the debt being recovered”. A statement of financial
position verified by documentation or a letter by a financial counsellor is
sufficient to show that the debt cannot be recovered within the financial year.
A record of the collection activity taken by the creditor will back this
up.
Seek Funds Elsewhere�
The threat of bankruptcy is used
as a pressure tactic to force the debtor to seek funds elsewhere. A common
suggestion is to borrow the money from family and friends. Unfortunately, the
debtor is forced to borrow from loan sharks. Although the debt collector is
happy his or her ledger is now tidier, this does not solve the problem: it
merely shifts the burden from the debt collector to the society at large. A
large financier can afford to write off tens of thousands of dollars, but a
family member lending their own funds cannot afford to and gains no tax
deduction when a private loan is not repaid.
The USA approach - no creditor petitions
Professor
Michael Staten of the USA spoke at the Congress and surprised much of the
audience when he explained there is no such thing as a creditor's petition in
the USA. Bankruptcy is only voluntary. Presumably, creditors realise the sheer
futility of spending a lot of time and money bankrupting an individual for
little or nil return.
Considering the needs of debtors and of society
The
Reverend Tim Costello also spoke at the Congress. He gave the debtors'
perspective of bankruptcy and mentioned its social impact. He preached the need
to return to community values and focus on society's needs rather than
individualistic wants. Lets hope that those individuals focused on chasing
their fees for debt recovery procedures were listening.
Greg Mowle is a financial counsellor with Lifeline in Brisbane, and a former Credit Manager with first hand experience in debt collection.
The Law Matters
RETAIL LEASES
By Chris Joyce, Solicitor, Credit Helpline NSW
If your client has a dispute in regard to a financial product or service, FICS can possibly help
We often see clients who have gone into business and have leased a shop from
which they conduct their business, and it is not uncommon for disputes to arise
between the tenant and the landlord. In NSW the rights of both the tenant and
landlord are set out in the Retail Leases Act .�
The Retail Leases Act (NSW) covers such things as the right to compensation for
pre-lease misrepresentation, review of market rent, repairs and maintenance,
alterations and refurbishments, assignment and termination of lease, shopping
centre leases and dispute resolution.�
The Administrative Decisions Tribunal has a special section that deals with
retail lease disputes. The rights of the tenant are quite extensive under this
Act. In other states and territories there is similar legislation e.g. Retail
Shop Lease Amendment Act – (QLD)
Also for all States and Territories there are rights in sections 51AA, 51AB,
51AC and 52 of the Trade Practices Act (Cth) which can be used to protect
business tenants in cases where the landlord is a corporation. In particular,
Section 51AC—Unconscionable conduct in business transactions—has
been used to reinforce the rights of retail tenants.�
The Federal Court has given a wide interpretation as to what is unconscionable
conduct. ACCC -v- Leelee and ACCC –v- Simply No-Knead. Section 51AC (3)
contains criteria (similar to that of section 70 (2) of the Consumer Credit
Code—Unjust transactions) by which the court will assess whether or not
unconscionable conduct has occurred.�
The broad provisions of Section 51AA –Unconscionable conduct within the
meaning of the unwritten law of the States and Territories—have also been
used by retail tenants.�
A tenant will always have an action under section 51AA if they can show that
they were the weaker party and were in a position of particular disadvantage,
and that the stronger party (the landlord) took unfair advantage of this
fact.�
Under Section 51AC unconscionable conduct has been held to include such things
as the imposition of undue pressure and unfair tactics, a failure to negotiate,
a lack of good faith, and a failure to comply with an applicable industry
code.
�
BETS 4 KIDZ
By Richard Brading, Principal Solicitor, WCLS
Australia leads the world in developing gambling problems. As with drug,
alcohol and tobacco abuse, the biggest at-risk group is the young. Children are
constantly exposed to gambling advertisements telling them to enter
competitions and win.�
Although minors (persons under 18 years old) are not permitted to gamble on
lotteries, poker machines, or horses, there are plenty of entry routes to the
addictive world of gambling. In most jurisdictions minors can legally gamble on
trade promotions (e.g. prizes if you cut out the coupon & place in the
barrel), raffles (e.g. a charity run lottery with total prizes under $20,000);
bingo; football tipping competitions and a range of little-known forms of
gambling.�
Of course, the big gambling league of pokies, casino and racing is forbidden
fruit and therefore highly attractive to teenagers. Some in the gambling
industry are conditioning children to become gamblers. The Crown Casino complex
in Melbourne is perhaps the best example. Crown has numerous teenage
entertainment venues including cinemas, amusement arcades and eateries. The
enormous gambling area is right in the middle, and highly visible to the
teenagers who are of course prohibited from entering. Throughout the country,
the same situation exists on a smaller scale. Gambling in its vast array of
forms and locations is provided in a prominent and attractive manner to
youngsters.
Children are permitted in clubs and hotels, although not in gambling or bar
areas. Their presence in these venues invites the same sort of exposure to
gambling, but on a smaller scale. One Sydney club thoughtfully provided an
amusement arcade for young people to play while their parents gambled. Half the
machines enabled the youngsters to gamble for “tokens”, including a
toy poker machine complete with handle. Other venues encourage children to
participate in bingo, raffles, lotteries and competitions. Schools, churches
and charities can be guilty of promoting children’s gambling as well as
business entities.
The conditioning of minors to gamble is highly disturbing. It is also
embarrassing to the more responsible sections of the industry. The CEO of Clubs
NSW recently wrote to his members:
“As a club member and parent and presumably a future grandparent what
I’m searching for is things like:
Inexpensive children’s menus in dining areas and suitable furniture (e.g.
high chairs)
In the larger clubs, high quality child minding facilities and qualified
staff
Appropriate separation where possible between family areas and gaming
areas/sports bars
Occasional organised events and activities for children (e.g. The Wiggles,
magicians)
A sense that children are actually welcome
Junior sub-clubs for sports and other activities like fishing”�
These things do exist in some venues, but sadly the emphasis is on gambling,
gambling and more gambling.
Gambling advertising expenditure is generally not permitted in the general TV
viewing time slots, but permitted at other times, particularly when teenagers
are watching. Gambling advertising is one-sided, urging mugs to gamble and win,
without presenting a balanced view of the risks. Whilst responsible gambling
advertising has had some success in Victoria, it is virtually non-existent in
other jurisdictions. The truth is that gambling advertising gets more people
hooked on gambling, and perhaps should be banned. Meanwhile, the conditioning
of our youth to gamble is a serious problem that is yet to be addressed.
Facts about mental illness
Mental illness is a fact of life for many Australians and can be a causal or
a complicating factor in many of the cases that come across a financial
counsellor’s desk. Here is a list of facts about mental illness that may
be of interest.
Five of the ten leading causes of disability worldwide are mental problems
– major depression, schizophrenia, bipolar disorder, alcohol use, and
obsessive-compulsive disorder (OCD).
A 1997 Australian Bureau of Statistics survey showed that 18% of respondents in
a sample of 10,000 reported having experienced symptoms of a mental disorder in
the last 12 months.
It is estimated that about 1 million Australians currently suffer from a mental
illness or disorder.
20% of the population suffer from a mental illness in their lifetime, some
short-term other chronic long-term.
It is estimated that of those suffering mental disorders:
34% are affective disorders (e.g. depression or dysthymia [chronic, mild
depression])
23% are anxiety disorders (e.g. panic attacks, phobias, OCD, generalised
anxiety disorder [GAD], agorophobia).
13% are substance-use disorders (e.g. alcohol, narcotics)
The Australian National Survey of Mental Health and Wellbeing, conducted in
1997, estimated that 6.5% of the adult population of Australia have one or more
personality disorders. Those with a personality disorder are more likely to be
young, male, not married, and to have an anxiety disorder, a substance-use
disorder or a physical condition as well as the personality disorder.
Women are more likely than men to be diagnosed with affective disorders,
particularly depression.
Men are more likely to be diagnosed with substance-abuse disorders.
Mental illnesses are a major cause of chronic disability in Australia, and
whilst they account for only 1% of all deaths, they are responsible for 27% of
years lost due to disability.
De-institutionalisation has led to a reduction in psychiatric hospital beds in
Victoria from 7,500 beds a decade ago to just over 300 beds today, and the same
pattern is occurring across Australia.
Public housing and hospital care shortage means that many of the mentally ill
are homeless.
Many mentally ill persons are unable to afford their prescribed medication and
consequently experience a deterioration in their conditions.
Many mentally ill persons are unable to access appropriate psychiatric and
other care in the community.
Acute episodes of mental illness can be brought on by stress. Financial
distress can exacerbate mental illness and can also prevent full
recovery.
The psychiatric case workers who assist seriously mentally ill people are often
unaware of the benefits and availability of financial counselling.
It takes up to five years from the onset of a serious mental illness before the
sufferer reaches their optimum level of managing their illness and
finances.
With the right assistance in the early stages of mental illness, many can
return to their normal workforce and families.
$1,000 per annum is available for the seriously mentally ill, in addition to
social security, to assist them to live independently�
A Carer’s fund exists to help carers with expenses incurred in the care
of a mentally ill person.
These facts were compiled from an article in the ‘Good Weekend’ of
the Sydney Morning Herald (May 12, 2001), and from Mary Radisich from the Casey
Cardinia Legal Service in Dandenong Victoria.
Remote Workers Teleconference
A teleconference for remote workers on the Commonwealth Financial
Counselling Program (CFCP) was held on 6 June 2001 and financial counsellors
from Cairns, Rockhampton, Townsville and Narromine through to Coober Pedy,
Alice Springs, Katherine and Darwin were able to participate. It was a great
opportunity to get this special group of people together.�
A number of issues were put forward for discussion and below is a summary of
some of these. It is not meant to represent a complete analysis of the topics
covered but instead gives a brief summing up of areas discussed.
Effective Education Programs
Gaining of trust and acceptance by communities can be very difficult for remote
workers, particularly new ones to an area and one of the most effective ways of
gaining that trust is through community education. These are some of the
thoughts expressed during the teleconference :
School Education programs are a good access point to remote communities. School
children are often open to learning and it can lead to contact with adults and
the broader community in general.
- Running programs for other community based organisations can be a good way
of informing and educating others into what financial counselling is and can do
for people of the community.�
Some groups are also open to learning about the basics of budgeting and managing finances and are then willing to take on these tasks to help an overburdened financial counsellor who may be trying to cover huge areas. Many financial counsellors who work in remote areas have enormous distances to cover - some the size of Victoria. - Learning by example is sometimes an effective way of teaching new concepts. Illustrating through case histories (suitably broadened to retain anonymity) can be most effective in getting a point across.
- Informing people of their consumer rights was thought to be a most important part of any education plan.
- Prioritising expenditure is a key part of most education programs and having written material to back up and illustrate this. Needs versus wants and informing people of the consequences of various options is essential.
Strategies for coping with Stress
Many financial counsellors operate under very stressful circumstances
dealing with the pressures of people in crisis and the huge demands of caseload
can be overwhelming at times. So how do you switch off and look after
yourself?
Some techniques disclosed were:
- Make a rule of keeping one day or afternoon free just to slow down a bit. One counsellor makes a rule of keeping Friday afternoons client free just to wind up the week and slow down for the weekend.
- Treat yourself to a nice long lunch with colleagues or friends once a month - just relax and enjoy each other’s company. We all need to have a life outside work.
- Everyone needs someone to dump on - not to solve problems but just to be able to listen in an empathic way.
Funding
Rosemary Delahunt, (Director) and Francis Foo from the Commonwealth Financial
Counselling Program were able to join the first part of the teleconference and
had this to say:
- They fully appreciate the enormous efforts being made by all financial counsellors particularly during times when services are stretched to the limit.
- Unfortunately there was no extra funding made available in the recent federal budget for the CFC program, but there are some developing policy initiatives like Family Law Pathways which may provide the opportunity to raise the profile of financial counselling services and help the arguments for additional resourcing.�
- Rosemary was pleased to be able to talk to the remote workers and get to know some of their issues first hand. She stated that this would help her develop a greater understanding of their needs and enable her to project these to others when decisions are being made about funding.
Getting blood from a stone?
Basic bank accounts
by Louise Petschler
The banks have announced better basic accounts for social security
recipients. Louise Petschler from the Australian Consumers’ Association,
offers a brief overview.
Banking is an election issue – and the banks have noticed. Community
outrage continues to run high. While the Government remains silent on the
community’s banking concerns, the ALP is promising a social charter and
(if needed) regulation, and the Democrats continue to argue for better
services.�
We’ve seen some important advances as the banks try to embrace social
obligations (and avoid regulation) – one of the biggest is a commitment
to no interest, low fee “basic” accounts for consumers on social
security.�
In April the Australian Bankers’ Association announced a minimum standard
for basic accounts for consumers with a Commonwealth Government pensioner,
health care or senior’s health care card with 6 free transactions a month
(including 3 over the counter transactions), no account keeping fee, no
interest paid, and no promises on passbook access or fee restraint once over
the “fee free” limit. This minimum standard was setting the bar at
a pretty low level. Since then individual banks have made stronger promises on
“basic accounts”. A summary table of the offerings is below.
ANZ will offer an improved basic account from October. ANZ has also announced
that all customers aged 60 and over will not pay transaction fees (account
keeping fees apply). Unfortunately the ANZ basic account will not offer
passbooks. ANZ is also developing a “customer charter”.
NAB will offer a basic account from August, with passbook options. NAB will
also continue to offer its existing concessions and deeming accounts and has
flagged work with other banks on things like low interest loans and
accessibility.
Westpac’s basic account has less free transactions (6 a month) but is
free of the mean-spirited 12 month relationship requirement that bars new
customers from opening the NAB or ANZ accounts. Westpac also continues to offer
deeming accounts and disability concessions, but has stopped passbooks to new
customers.
Commonwealth has so far failed to improve it’s Commonwealth accounts and
has told customers to move to the Woolworth’s EzyAction account for
“basic” services. Recent comments by the bank’s CEO Mr David
Murray suggesting that if the community keeps asking for fair fees or
regulation then banks may limit services is a dangerous sign from the bank with
the largest number of deposit accounts, and a warning that talk of social
obligations might be more rhetoric than reality.
Moves on safety net account are welcome. But the fine print shows some
problems:
- ANZ and NAB are limiting their account to existing customers – with a mean-spirited 12-month relationship requirement before new customers join.
- Basic accounts focus on pensioners and those with government concession cards. It’s about time the banks gave a fair deal to pensioners and those in financial need! But there’s no concessions here for others who do not qualify for exemptions. These accounts are also “no interest” accounts just for low balances.
- Westpac has ceased offering passbook accounts to new customers – a poor response to the needs of those who rely on passbooks to manage accounts.
- There have been no commitments made on fees generally – for example, in June the ANZ announced some increased charges, despite announcing its basic bank account less than a week before. No bank is promising broad fee restraint.
- Commonwealth has the largest number of eligible customers, but promotes Ezybanking as its basic account. CBA should focus on where it has millions of accounts, not thousands, if it is serious about social obligations.
- None of these initiatives address issues like maintaining face-to-face service, improving fee disclosure, or community reinvestment by the banks.
Basic accounts are important, and the task now is making sure they are put
in place, promoted, and working – and not limited by exemptions or
restrictions. For affordable banking to be a reality, however, we need a low
cost account for all, and regulated standards. In the next issue of our policy
journal Consuming Interest, ACA looks at the work still to be done (the article
will be posted on www.choice.com.au ).�
ACA would welcome comments on basic banking to lpetschler@choice.com.au�
BACK TO BASICS - What the four big banks are offering
NAB
Concession Card Account
ANZ
Access Basic Account
CBA
Woolworths Ezi Banking Account
WESTPAC
Basic Account
Who qualifies?
Aged pensioners; Social Security recipients (must be NAB customer for over 12mths)
Those holding Health Care Card, Seniors or Pensioner Cards
No restrictions
Aged pensioners; Social Security recipients
Free transactions per month
13 over counter a month or 66 electronic
15 over the counter or electronic (unlimited for aged 60+)
55 in Woolworths stores , 5 at ATMs
6 over the counter or electronic
Account keeping fees & minimum balance
None
None
None
None
Fee charged after free transactions used up
$2.50 per transaction
$2.50
$2.50
$3.00
Passbook
Yes
No
No
No
Cheque book
Yes
No
No
No
�
NOTABLE FACTS ...
�In a 1996 US poll, the reasons for bankruptcy were cited as follows:
‘Overextended’
29%
Health problems
17%
Employment problems
15%
Divorce
12%
Cannot stand debt collectors
6%
In 1871, William Russel Frisbee founded the Frisbee Pie Company in
Bridgeport, Connecticut.
Back in 1920, Frisbee pies became popular with students at Yale University.
They discovered that not only could you eat the pie, but you could also play
with the tin plate afterward.
It was another 30 years before the Wham-O Toy Company, fresh from its success
with the hula hoop, would try to market a flying saucer toy. Wham-O called it
the ‘Pluto Platter.
In 1959, a company executive heard about the game they played at Yale, and
decided to change the product’s name from Pluto Platter to
Frisbee.�
William Frisbee is remembered today, not for his pies, but for the aerodynamic
properties of his pie tins.
Financial Counsellors have to deal with many small businesses going
bankrupt. In the past month, says Greg Mowle, I have had to
help:�
A plumber who went down the gurgler�
A paper manufacturer who folded�
An ice cream maker who went into liquidation�
A glazier who crashed�
A builder who went to the wall�
A clock maker who was wound up�
A laundry man who was taken to the cleaners�
An exotic dancer who went belly-up�
A bra manufacturer who went bust
I think we’d better stop there! Thks……..Ed
In the Media
Card policies do banks little credit
The credit card interchange fee to banks is crushing small businesses. A group
of BP service station operators from northern NSW recently appealed to ACCC for
help. One business sold one million litres of petrol on credit between December
1998-99. The credit card interchange fee to banks of 1.2 per cent cost the
operator $9588 over the 12 months. He calculates that, over the 12 months to
July this year, his one million litres on credit will cost him $13,600 in fees
to the card providers – a 40 per cent increase.�
With the fee now at 1.9 per cent and with the GST, profit margins are being so
eroded that the service station operator comes out with just 9c from a $20
transaction.
The Daily Telegraph, 14 May 2001 page 21
Customer fact files go to the highest bidder�
Databases of personal information given to companies during marketing campaigns
or supermarket competitions can be traded legally, the Privacy Commissioner
warned yesterday. The statement came after revelations that children as young
as six had received pre-approved credit card applications in the mail.
Several more cases of the under-age credit offers came to light yesterday
following a Herald report of a $3,000 Visa card being offered to a 10-year-old
Croydon boy. Mrs Wendy Cayless, of Summer Hill, said her six-year old daughter
Nicola (in Year 1) had been disappointed to find that her $2 weekly allowance
would not stretch to repayments on a $3,000 credit card.
The NSW Privacy Commissioner, Mr Chris Puplick, said once consumers had
committed their personal information to companies during marketing campaigns or
when signing up for products, they had no control over the release of that
information.
The Sydney Morning Herald, 8 June, 2001�
$170m computer fix for pension bungles
The Federal Government will spend $170 million upgrading Centrelink’s
computer system in the coming Budget in an attempt to address serious
administrative flaws that have seen new pension claims often wrongly
assessed.
An Auditor General’s report found more that half of new pension claims
were assessed incorrectly by Centrelink, despite assertions by the agency that
less than 5 per cent were mishandled.
The Auditor General assessed 354 new applications for the pension and found
52.1 per cent were done incorrectly. In these cases Centrelink “could not
assure payment at the right rate, from the right date, to the right person with
the right product”
The Sydney Morning Herald 19 May, 2001
Mobile phone fees to rise for millions
Mobile charges are likely to rise following a Federal Government decision to
more than double the cost of annual spectrum licence fees.
The licence price rise from $7 million to $17 million a year – applies
to the GSM (global system for mobile) system used by 10.2 million, mainly
metropolitan, Australians.�
A spokeswoman for Vodafone said the $10 million increase inevitably would be
passed on to consumers with GSM phones.
The Sydney Morning Herald, 18 May 2001
