Sharkwatch May 2005

Notes & Notices

Debtor harassment help

Financial counsellors or their clients seeking information about debtor harassment can call the Australian Securities and Investment Commission (ASIC) Infoline on 1300 300 630 or the Australian Competition and Consumers Commission (ACCC) Infocentre on 1300 302 502. Pamphlets are available from the ACCC on request.

Financial hardship fact sheet for consumers of telecommunications products now available

The Australian Communications Authority (ACA) has just released a fact sheet to help consumers experiencing financial hardship to manage their spending on telecommunications services.

The sheet is 4 pages long and contains:

tips for managing phone use and expenditure,
descriptions of the products and services available for managing usage and spending (and there are plenty!!),
details of the complaints process,
a list of assistance programs, and
advice on how to find a financial counsellor.

Although this is a very helpful resource, the ACA tell me that they do not produce hard copies of the sheet, and so all copies need to be accessed as a download from the internet. To access this particular fact sheet, go to: http://internet.aca.gov.au and then click on publications - fact sheets - consumer fact sheets. This takes you to a web page where all of the ACA fact sheets are listed in numerical order, with the latest at the top of the list. Download the fact sheet labelled fsc95.

All ACA fact sheets can be downloaded in either pdf or html format. I would recommend using the pdf format, as it links to a brochure quality version that is far more user friendly and is much better presented.

No fee for lodging debtors petition!

After a great deal of hard work and lobbying from AFCCRA and the various state associations, it was great to see that ITSA have scrapped their plan to introduce a lodgement fee for Debtors’ Petitions. There will, however, be other changes to fees. Below is a reproduction of a letter from Terry Gallagher to ITSA stakeholders giving details of some of the changes.

“Dear Stakeholders

In Tuesday’s budget the Government announced that ITSA will be adopting a formal cost recovery regime in respect of its fees and charges payable under the Bankruptcy Act and related legislation. This will commence on 1 July 2006.

You will recall that we had gone through a consultation process as part of the Cost Recovery Review. A Cost Recovery Impact Statement was produced at the conclusion of that review, and is now available on ITSA’s website. A summary of the Cost Recovery Impact Statement is also included in ITSA’s Portfolio Budget Statements for 2005–2006 (at pages 383 to 390).

The major features are:

A reduction of the Realisation Charge from 8% to 6.5% in bankruptcy and PIA matters

Introduction of a 6.5% Realisation Charge on Debt Agreements

No processing fee for Debtor’s Petitions and Debt Agreements

An increase in the fees for Bankruptcy Notices from $300 to $400

An increase in the fees for PIA deeds from $300 to $400

The full schedule of fees and charges is included in the Cost Recovery Impact Statement. The new charging arrangements will commence from 1 July 2006, to allow time for necessary legislative amendment and preparation of revised systems and procedures.”

Counselling the Angry or Aggressive Client

Wayne Warburton

Although most financial counsellors regularly deal with angry clients, it is commonly believed that aggressive or violent behaviour from clients is rare. Over the years, however, counsellors have spoken to me about being yelled or screamed at, being spoken to inappropriately, having their personal space deliberately invaded by clients, and having clients behave in other aggressive or threatening ways. Some have even reported outright violence. One counsellor had a computer monitor thrown at her, another was chased around her office, and another was sexually assaulted.

On the whole, financial counsellors tend to get little training on how to deal with angry or aggressive clients, so we thought it may be timely to write a little about the nature of anger and aggression, the reasons why anger and aggression occur during counselling, and strategies to handle aggression and anger when they occur.

What is aggression? What is the role of anger?

There are as many definitions of aggression as there are researchers, but generally speaking, aggression is usually thought of in terms of behaviours that are intended to cause harm to another person. To rule out consensual harm (e.g., dentistry, sado-masochistic sex, waxing etc.) the proviso that the target must be motivated to avoid the harm is usually added.

The type of harm might include physically hurting another (physical aggression), psychologically hurting another with words (verbal aggression), or hurting a person indirectly through harming their reputation, friendships or property (indirect aggression). Aggression may also involve harming an innocent third party (this is displaced aggression). This type of aggression is most common when the aggressor feels powerless to hurt the person that they really feel aggressive towards. Passive aggression usually involves outwardly avoiding conflict with another person, whilst acting in subtle ways to hurt or undermine them. Examples include ‘accidentally’ buying the brand of toothpaste you know your partner hates, constantly ‘forgetting’ to bring the paperwork a counsellor asks for, or pretending not to notice someone.

Aggression is often further categorised as being either hostile (usually a response to provocation and often accompanied by anger or other strong emotions) or instrumental (cold and calculated aggression that is purposefully carried out to obtain a goal).

Anger is not aggression. However, anger can contribute to aggression by activating other thoughts and feelings related to aggressive behaviour, and by energising us to act. People are also more likely to act aggressively if anger is ‘clouding their thinking’, and may also use anger as a justification for hurting others.

It is important to remember that expressing anger is often cathartic (i.e., it gets it ‘out of your system’), but behaving aggressively is not. When people act aggressively, the impulse to hurt others usually increases rather than diminishes.

What is happening inside the person during aggression?

Everyone has the potential for anger and aggression, and it is helpful to know what is happening inside our clients (and ourselves!) at such times. There are many theories about this, each of which tends to look mostly at one aspect of aggression, and all of which can explain some types of aggressive behaviour. Several of these approaches seem relevant to understanding aggression in financial counselling clients.

At the most basic levels, evolutionary psychologists look at aggression in terms of its value in promoting the survival of the species (the most aggressive animal gets more food, better mates, has more offspring, etc.), and portray aggression as being a ‘hard-wired’ instinct in all of us. From this perspective, when our territory or mates or children are threatened, a tendency to respond aggressively will be automatically aroused.

Sigmund Freud also looked at a more base level of aggression, suggesting in his earlier works that every person has aggressive and sexual drives that provide much of the energy that pushes us forward in life. When I think about many of our great heroes — people like Martin Luther King and Mother Teresa — I wonder how much of their work was fuelled by their anger at injustice, and whether something like Freud’s aggressive drive was a significant part of the underlying force that drove them. There is also evidence from researchers like Konrad Lorenz that most animals have an inborn aggressive drive, and many believe that humans are no different. Whether this is correct or not, it also seems to be true that the more evolved an animal is, the more it is able to resist its aggressive urges.

Biological scientists look at aggression in terms of the roles played by hormones (such as testosterone and oestrogen, which seem to increase aggression), neurotransmitters (such as serotonin, which seems to play a role in inhibiting aggression), and different brain structures. Damage to the frontal lobes, activity along a neural pathway known as the Ascending Reticular Activating System (ARAS) and general physiological arousal have all been linked to increased aggression. However, it is important to remember that much of this research has been conducted on animals rather than humans, and theorists such a Craig Anderson (2000) warn that ‘biological effects on aggression are not as strong or as consistent as the general public believes.’

The frustration-aggression hypothesis of Dollard et al (1939) suggests that aggression always stems from the anger we feel when we become frustrated. Clearly this is not strictly true (frustration doesn’t always lead to anger and aggression is not always caused by anger), but frustration is a common cause of anger and aggression.

Leonard Berkowitz (1989) reworked this theory to produce the highly influential Cognitive Neo-Association Theory (CNT). CNT assumes that memories, emotions, thoughts and plans for action are linked together in the brain, with some links being stronger than others. When one part of this network is activated by an unpleasant event (for example, the part of the brain that registers frustration), the linked parts (such as the parts that register anger, contain the concepts of various swear words, or store memories of other frustrations or relevant ways to respond to it), also become activated. The parts that become most strongly activated are the parts that will have the greatest influence on what that person eventually does.

Learning theories suggest that people acquire aggressive tendencies through direct experience (for example, when aggressive behaviours have brought them rewards in the past). Albert Bandura’s (1977) social learning theory further suggests that people acquire aggressive tendencies through observing and copying the behaviour of aggressive role models.

Researchers like Rowell Huesmann (1986) take this approach a step further and talk about aggressive episodes running like a movie script. When a situation is very familiar we tend to play things out in a similar way most times (as may happen with domestic violence), until the response becomes automatic whenever that situation arises.

Another approach emphasises the importance of physiological arousal. Generally speaking, arousal intensifies people’s responses, and a tendency to be aggressive is more likely to lead to actual aggressive behaviour (and the aggressive behaviour is more likely to be violent), if that person is aroused first.

Some aggression theorists have emphasised the influence of various emotions. Silvan Tompkins demonstrated the power of shame and humiliation to produce anger and aggression. (More recently, evidence has suggested that many school shootings may have been due to the humiliation the shooters felt at being socially rejected by their peers.) Feelings of personal loss can also produce angry or aggressive responses.

Finally, the Social Interaction theory of Tedeschi and Felson (1994), portrays aggression as a way of achieving desired goals. These may be as diverse as obtaining something of value, getting revenge, or putting forward a desired image (such as being tough or competent). Some cultures of violence (such as those found within bikie gangs and certain social and/or ethnic groups) are good examples of this.

The General Aggression Model — Anderson & Bushman (2002)

Craig Anderson and Brad Bushman have put together a model that incorporates several of these theories into a General Aggression Model (GAM). According to the GAM, an episode of aggression firstly depends on the nature of the situation (the aspects of the situation that can trigger aggression) and what the person brings to it (the beliefs, personality factors, memories etc. that increase their readiness to aggress in that situation). Whether or not someone responds to the situation with aggression depends firstly on the nature of the thoughts, feelings and physiological responses that are aroused, and then on how much that person thinks through their response.

Why are financial counselling clients sometimes aggressive?

Looking at these processes, there are a number that seem to be relevant to our clients.

Firstly, the possibility of losing one’s home, or of being separated from one’s partner and children through imprisonment, are just the sort of threats that would activate powerful instincts about safety and territory. These instincts are so deep that they are almost automatic, and they may impel people to be aggressive without thinking through the consequences of their actions.

In terms of biological factors, many of our clients are depressed, which usually means that they also have a deficit in serotonin, the primary neurochemical which inhibits aggression. Also, damage to the brain’s frontal lobe, which plays an important role in forward thinking and self-control, is linked to both impulsive behaviours like overspending and to greater aggression. This means that some clients who get into financial trouble due to impulse control problems will also have trouble controlling any aggressive tendencies.

Our clients are often very frustrated by the time they come to see us. Frustration commonly leads people to feel aggressive, and can activate other hostile thoughts, feelings and memories. If someone comes to see us with aggressive thoughts, feelings and memories already active, it won’t take much provocation to bring that anger/aggression/hostility to the surface. In addition, if our clients feel powerless against the people or organisations they are in conflict with, their anger and aggression may be displaced to more convenient targets such as family, friends, pets and counsellors.

Also, prior to seeing us, our clients have often had many run-ins with their creditors and/or various agencies such as Centrelink. Talking to creditors and agencies would often become like a script that begins with yet another explanation of the problem and finishes with an angry confrontation. Talking with a financial counsellor about their problems (yet again) would be like starting the script one more time, and could set in motion the same thoughts and feelings they have experienced in the past, including aggression toward the authority figure.

The financial counselling process will inevitably bring to the surface many emotions related to the client’s situation. Because of the nature of the problems that we routinely deal with, those emotions will often be related to shame, humiliation and loss (“I should have been able to manage my finances better” and “now I have nothing”). Such feelings make many people want to lash out.

A small number of our clients may feel that bullying the counsellor will help achieve their goals. Others may come from cultures that normally use aggression as a social tool, or where anger and assertiveness have different meanings to those in mainstream Australian society. I have seen clients use aggressive tactics as a way of coercing their counsellor to act quickly, to take personal responsibility for sorting things out, or to sign official documents (such as a Statement of Affairs) in the client’s place. A counsellor may have to work out whether an aggressive client is coercing them in a deliberate way (for example, sociopaths often stand over people and use their threatening stance to get their way), or behaving in a way that is normal within their own culture.

It is often helpful to think about an aggressive episode in terms of the GAM. What is the person bringing to their appointment with you? What is triggering the aggression? Is the person physiologically aroused or emotionally aroused? What might they be thinking? Do they have the personal resources and opportunity to think through the consequences of their behaviour? Understanding some of these things should help us to put their anger and aggression into context, and to work out a way of constructively dealing with it.

Strategies for counselling angry or aggressive clients

When thinking about strategies for use in our day to day counselling, it is important to distinguish between anger and aggression. My belief is that the best approach is to value and work with a client’s anger, but to not accept aggression or violence. Working well with a client’s anger will usually reduce the likelihood of actual aggression, and is the preferred approach.

1) Principles when dealing with aggression or violence:

General principle 1: your own safety is paramount. Don’t let your professional pride prevent you from putting your own safety ahead of the client’s needs when you judge yourself to be in real danger of assault. Prepare a strategy in advance for what you would do in this situation. Make sure that there is nothing (especially a desk) between you and the door, and always work with someone else nearby. Intuition can be important too. I am told that many female counsellors often leave it too late to decide that they are in danger, despite having had an intuitive feeling that something was wrong. These safety principles are not just good practice — they are enshrined in Occupational Health and Safety legislation and are a legal requirement.

General principle 2: thinking through. Although people may at times become more aggressive after thinking something through (ruminating, dredging up bad memories etc.), it is usually true that the more people think things through, the less likely they are to be aggressive. You, as the counsellor, can assist in this process by providing the time for reflection, or by providing a way for the person to back down from confrontation without losing face. This can be a good starting point from which to examine the client’s angry or hostile feelings in a more productive way.

General principle 3: reduce arousal. Physiological or emotional arousal increases the likelihood of an impulsive and aggressive response. If the counsellor is concerned about the client becoming aggressive or violent, he/she can assist them to become less aroused by remaining calm, providing a calm environment, or providing things that people find soothing (e.g., food, tea). However, if the client is merely angry, the counsellor may choose to encourage the client to express their feelings (see the next section).

General principle 4: offer control: Recent research has shown that when people perceive that they have lost control over some aspect of their world, they will often respond with aggression as a way of restoring a sense of control. It is important that counsellors do what they can to empower their clients, to offer them choices, to assist them to feel effective in the world, and to judiciously offer them control over some aspects of the counselling process.

General principle 5: activation works both ways. Just as anger, frustration and negative feelings activate all sorts of other negative feelings, thoughts, memories and impulses, the same principle applies for positive experiences. Feelings of security, control, belonging, high self-esteem, warmth, love and pleasure activate other positive thoughts, feelings and impulses. Similarly, while it is hard to feel happy, retrieve happy memories and behave pro-socially when you are feeling angry and frustrated, it is also hard to feel hostile and angry, retrieve unhappy memories, or behave aggressively, when you are experiencing pleasure or feeling warm, secure and loved.

General principle 6: working with shame, humiliation, and loss. Client aggression may have a lot to do with shame, humiliation and loss. Emphasising the amount of competent people who get into similar situations, and telling the client how normal it is to feel strong negative emotions in the face of such problems, may help. By exploring the sense of loss, and making the situation seem less humiliating, the counsellor not only lessens the likelihood of aggressive behaviour, but also assists the client move forward.

2) Principles when working with anger.

Allowing clients to act aggressively is rarely helpful, but working with anger can often be very beneficial. Expressing anger can ‘get it out of your system’ and be a valuable release. It is important that counsellors don’t take it personally when clients are angry — the root cause of the anger usually lies elsewhere — but instead try to explore the true cause of that anger.

If we try to fight a client’s anger head on, it is ultimately a battle we cannot win. It is far more fruitful to think in terms of harnessing that person’s anger and hostility as a driving force for positive change, as others like Martin Luther King have done in the past. Such strong emotions can be used to motivate clients and to add energy to their constructive endeavours. As financial counsellors we can assist our clients to learn how to use their feelings assertively rather than aggressively, to use their feelings as a motivational force for change, to direct their anger into such constructive activities as letter writing campaigns, or to use their anger at injustice to help others hurt by the system.

When a client’s anger is related to such things as loss and injustice, disapproval from the counsellor is not really appropriate. Rather, validating the client’s feelings, empathising with their position, and providing a safe environment for them to express their feelings are the sorts of responses that will lead to the best outcomes. Although many counsellors use decentring when dealing with client anger (stepping outside their own frame of reference and mindfully ‘stepping into the shoes’ of the client), this approach is not appropriate for dealing with aggression or violence.

One problem often discussed in counselling is that of mirroring — the tendency to unconsciously take on the mood state and thoughts of our clients. When their clients are angry, counsellors tend to find themselves becoming upset or angry as well. It is important to consciously halt this process if it occurs, before it undermines the counselling process.

I would like to finish by saying that the way the counsellor approaches anger in a client is crucial. Understanding their anger and working with it will be more effective than fighting it or trying to coerce the client to behave better. Eric Harris, one of the shooters in the Columbine High School massacre in 1999, was put into anger management classes. He wrote an insightful essay that described various ways to manage anger and which noted his commitment to the principles. At the same time he was drawing up plans to ‘kill at least 500 people and blow up the school’. In terms of positive outcomes, forcing people to suppress their anger is rarely as effective as assisting them to harness it.

References and suggested reading

Anderson, C. A. (2000). Violence and aggression. In A. E. Kazdin [Ed.], Encyclopaedia of psychology, 8, (pp. 162–169). New York: Oxford University Press.
Anderson, C. A., & Bushman, B. J. (2002). Human aggression. Annual Review of Psychology, 53, 27–51.
Bandura, A. (1977). Social learning theory. New York: Prentice Hall.
Bandura, A. (1983). Psychological mechanisms of aggression. In R. G. Geenj & E. Donnerstein [Eds.], Aggression: Empirical and theoretical reviews, 1, (pp. 11–40). New York: Academic Press.
Berkowita, L. (1989). Frustration-aggression hypothesis: Examination and reformulation. Psychological Bulletin, 106, 59–73.
Dollard, J., Doob, L., Miller, N., Mowrer, O., & Sears, R. (1929). Frustration and aggression. New Haven CT: Yale University Press.
Huesmann, L. R. (1986). Psychological processes promoting the relation between exposure to media violence and aggressive behavior by the viewer. Journal of Social Issues, 42, 125–140.
Leary, M. R., Kowalski, R. M., Smith, L., & Phillips, S. (2003). Teasing, rejection, and violence: Case studies of the school shootings. Aggressive Behavior, 29, 202–214.
Lorenz, K. (1966). On aggression. New York: Harcourt, Brace, World.
Tedeschi, J. T., & Felson, R. B. (1994). Violence, aggression and coercive actions. Washington DC: American Psychological Association.
Warburton, W. A., Williams, K. D., & Cairns, D. R. (in press). Ostracism and aggression: The moderating effects of control deprivation. Journal of Experimental Social Psychology.

The Law Matters

Faye Westwood
Solicitor
Wesley Community Legal Service

Domestic Violence: Confidentiality and When to Report to Police

Counsellors are sometimes in a position where they believe their client is the victim of domestic violence, perhaps because the client tells them, or the client is injured or frightened, or the counsellor observes signs of physical injury, e.g. bruising, broken teeth, other marks on the body etc. Because of the nature of domestic violence, it may be that the counsellor suspects that domestic violence has occurred and the client has said nothing. There are two key issues in this situation: confidentiality and when to report to police.

Counsellors are required to protect personal information under privacy legislation. There are strict requirements in relation to protecting the personal information of an individual whose identity can be reasonably identified.

There is also a category of sensitive information which includes health information for which the standards of protection are very high.

The Commonwealth Privacy Act 1988 sets out how personal information is to be collected and used. The Act applies to businesses with a turnover of above $3 million a year and most private and community sector organisations in the non-government health sector. This applies throughout Australia. (In addition, some states have their own legislation). Section 14 of the Act contains the Information Privacy Principles.

Personal information cannot be disclosed unless:

the client has consented to the disclosure;
the client is aware that information of that kind is normally passed on to a body or agency;
the disclosure is required or authorised by law (this would cover instances where a subpoena is issued);
the disclosure is reasonably necessary for the enforcement of the criminal law or for the protection of public revenue (tax fraud or Centrelink fraud); or
the counsellor believes on reasonable grounds that the disclosure is necessary to prevent or lessen a serious or imminent threat to the life or health of the individual concerned or of another person.

The best way to protect the individual and their privacy is to get their consent for you to tell police about the domestic violence. However, often victims are reluctant to give consent for this. Consent should be obtained in writing. If you are unable to obtain consent, you need to move on to consider whether there is a “serious or imminent threat to life or health”.

It is a matter for professional judgement as to whether there is a “serious and imminent threat to the life or health” of the person you are counselling or another person. It would be appropriate to confer with a supervisor before making such a disclosure to the police.

Counsellors also need to consider whether there are children who could be at risk and whether reporting is necessary to child protection agencies. With children, counsellors need to consider the risk of serious physical or psychological harm.

The NSW Health Policy (below) for identifying and responding to domestic violence contains useful practical advice on the topic of domestic violence and confidentiality. Other States and Territories may have similar policies.

“Limited confidentiality

When the safety of others is involved, the principle of confidentiality cannot be offered unconditionally. In situations where reports to the Department of Community Services and NSW Police are necessary, the consent of the person involved is not required.

Health workers who hold a genuine and realistic concern about harm to a person may inform the third party of that risk. Where this action is taken this is not considered a breach of confidentiality, as workers act with lawful excuse. This is known as a ‘Tarasoff warning’.

Reporting to police

Domestic Violence poses such a significant risk to individuals that in some cases reports to NSW Police must be made, even where this is against the wishes of the victim. Health workers must report to NSW Police regardless of the victim’s views where:

serious injuries have been inflicted, such as broken bones, stab and gunshot wounds.

the perpetrator has access to a gun and is threatening to cause physical injury to any person.

the perpetrator is using or carrying a weapon (including guns, knives or any other weapon capable of injuring a person) in a manner likely to cause physical injury to any person or likely to cause a reasonable person to fear for their personal safety.

an immediate serious risk to individual/s or public safety exists.

an offence has occurred on NSW Health premises, or in circumstances in which health workers are threatened because of their professional role.

Firearms

The NSW Firearms Act 1996 and Firearms (General) Regulation 1997 state that medical practitioners, registered psychologists, registered nurses, enrolled nurses and persons who provide professional counselling services may inform the Commissioner of NSW Police that they are of the opinion that a patient is unsuitable to be in possession of a firearm:

because of the patient’s mental condition, or

because the practitioner thinks that the patient might attempt to commit suicide, or would be a threat to public safety, if in possession of a firearm.

These provisions operate despite any duty of confidentiality, and any action taken by a practitioner under this section does not give rise to any criminal or civil action or remedy.”

In addition to the above information, counsellors in some States such as NSW may be required under the Crimes Act to report serious criminal offences to the police. This includes serious offences such as assault. Counsellors need to consider whether they have information that will be of “material assistance” to securing the apprehension or conviction of an offender.

It should be noted that gambling and financial counsellors in N.S.W. can only be prosecuted with the approval of the NSW Attorney General for failing to bring the information to the attention of the police.

This recognises the difficult situations counsellors are often placed in when they are considering their obligations to protect the privacy and confidentiality of client information.

Other States and Territories may have similar provisions.

There can be no set of prescribed rules as to when you should or should not report domestic violence to police and breach your client’s confidentiality. It is a matter for professional judgement.

If you are in doubt, discuss the issue with your supervisor or seek legal advice.

With thanks to NSW Health, in particular Leanne O’Shannessy, Deputy Director, Legal Branch.

AFFCRA: Bankruptcy Update

Jan Pentland
Chairperson of AFCCRA

Bankruptcy Reform

On April 11, I attended a meeting of the Bankruptcy Reform Consultative Forum in Sydney. The Attorney General, Phillip Ruddock spent two hours at the meeting, demonstrating his continuing commitment to bankruptcy reform. The meeting included spirited discussion of a number of issues including:

The Bankruptcy and Family Law Legislation Amendment Act 2005:

This Act received Royal Assent on 18 March 2005 with the most significant amendments relating to the harmonisation of family law and bankruptcy likely to commence 6 months after the date of Royal Assent, i.e. 18 September 2005. There will be considerable liaison between ITSA, the Family Court and family lawyers in regard to implementation. The amendment for a supervised account regime for collection of income contributions from recalcitrant bankrupts commenced on 18 March. Changes to exclude financial agreements from the definition of ‘maintenance agreement’ and create a new act of bankruptcy where a person is rendered insolvent as a result of transferring property pursuant to a financial agreement commenced on 15 April 2005.

The Proposed Bankruptcy Anti-Avoidance Measures:

Outcome of the consultations and submissions on the discussion paper on proposed amendments to address concerns that some bankrupts on high incomes use bankruptcy to avoid paying debts while maintaining their lifestyle through assets held by other entities were considered. I was pleased that suggestions to make non-lodgement of a tax return a rebuttable presumption of insolvency or an act of bankruptcy have fallen by the wayside. Other proposals which will have an effect on a small number of clients of financial counsellors include increasing the time period in sections 120 and 121 from 2 years to 4 years, thus extending the period where a transferee must be able to prove solvency; and allow recovery where a purpose rather than the main purpose of a transfer was to defeat the interests of creditors. Other proposals primarily concern the use of trusts to avoid paying creditors. A Bill to amend the Bankruptcy Act is likely to be drafted for comment in the coming months. AFCCRA, with the assistance of Richard Brading, has recently responded to a further issues paper on these issues.

Implementation of Cost Recovery within ITSA:

Mr. Ruddock confirmed that he has received and considered the strong opposition to the proposal to impose a fee for processing of debtors’ petitions. A decision on ITSA’s cost recovery mechanisms was be announced in the Budget papers and AFCCRA was delighted that the fee was NOT introduced. Congratulations to financial counsellors and consumer advocates around the country for the excellent campaign which contributed to this outcome! The new cost recovery regime which affects other ITSA fees and charges will commence on 1 July 2006.

Part IX Debt Agreements:

Despite Mr. Ruddock’s and ITSA’s positive spin on Debt Agreements (DAs), I registered the continuing concerns of financial counsellors at the practices of Debt Agreement Administrators (DAAs). While the number of bankruptcies have fallen by 3% and DAs by 9%, the number of DAs which are terminated before completion continues to rise, indicating that many are unviable. Representatives of credit unions and banks on the Forum confirmed their continuing concerns with DAAs and ITSA indicated that they will undertake another review, hopefully this year. ITSA recently declared Mr. Grant, a Queensland DAA, ineligible to operate and the Queensland ITSA office is currently sorting out the 800 DAs which he was administering. ITSA has now declared ineligible 7 DAAs. I will continue to raise issues with DAAs at meetings of the ASIC Consumer Advisory Panel and the ACCC Consumer Consultative Committee.

AFCCRA has recently learned that ITSA will commence its review of Part IX soon. We are grateful to Elizabeth Terry for agreeing to represent financial counsellors on the advisory group for the ITSA Review.

Other bankruptcy reform suggestions:

Forum members raised proposed bankruptcy reform to include greater harmonisation of bankruptcy and corporate insolvency; a review of offences under the Act; provision of policy statements similar to the recent ITSA statement on section 271, (for example, on section 265 — contracting credit which the bankrupt could not reasonably afford to repay).

Thank you to Richard Brading from Wesley Community Legal Service for attending this Bankruptcy Reform Consultative Forum meeting with me, and for his continuing support of our sector on bankruptcy issues.

AFCCRA Conference

AFCCRA will hold a one day Conference in Melbourne on Friday 17 June 2005. This is the first AFCCRA Conference for almost 10 years, but we hope that it will become an annual event. It will be held from 8.30am to 5pm at the Hotel Ibis in Melbourne.

The Conference will follow the Consumer Representatives’ Forum to be held on June 15 and 16 at the same venue, and is made possible through the generous sponsorship of the Commonwealth Department of Family and Community Services and the organisers of the Consumer Representatives’ Forum, the Industry Alternative Disputes Resolution Schemes, in particular the Banking and Financial Services Ombudsman.

There has been a great response to the Conference with over 70 registering to attend, including financial counsellors from every state and territory.

The AFCCRA Conference Program will include:

A welcome address from the Minister for Family and Community Services, Senator Kay Patterson;
A presentation from PhD student, Sharon Barker on the current landscape of financial counselling — a snapshot of financial counselling in the states and territories;
An address from AFCCRA Vice-chair, David Tennant on the changing landscape and how we should respond to it — a keynote address on the growth of the fee charging sector including Money and Debt Management Schemes and Debt Agreement Administrators followed by an industry panel and discussion;
A presentation by the Banking and Financial Services Ombudsman Scheme on maladministration of credit cards;
A workshop on training and accreditation of financial counsellors including the implementation of the Diploma of Community Services (Financial Counselling);
A workshop on how financial counselling can respond to change, eg reform of the sugar industry, services to problem gamblers; or crisis situations such as drought and the Canberra bushfires.

AFCCRA plans to publish reports on the two workshops as well as papers presented at the Conference and all this material will be available on the AFCCRA website at www.afccra.org

Direct any enquiries to Jan Pentland at 0407 042 483 or janpentland@hotmail.com

Centrepay

Jan Pentland

You may recall that some weeks ago I indicated that AFCCRA had written to Centrepay with concerns about some creditors who had access to the payments system, including enquiries by Collection House? On 27 April, I met with Adrian White, Senior Business Manager from Canberra and Greg Telley, Centrepay Account Manager for Victoria.

I was pleased to hear that debt collectors such as Collection House do not and will not have access to the payments system. Apparently Centrepay considered this in 2003 through an internal position paper and decided then that Centrepay was not an appropriate payment system for these debts. I was assured that the position has not changed despite Collection House’s approach to Queensland Centrepay.

AFCCRA raised in its letter, other possibly dubious use of the Centrepay system including Debt Agreement Administrators, funeral benefits schemes, insurers and fast food shops in the Northern Territory. I now have a full list of categories of Centrepay users and after consideration of these, will have further discussions with Centrepay about appropriate use of the system.

Also discussed were current and future use of Centrepay. In some states and territories fines can be paid by Centrepay but not in Victoria. I am interested in your views about whether an option to pay fines using Centrepay is useful for our client group. Particularly interested in the views of financial counsellors in the states and territories where this is in place — is it working to the benefit of our clients? — as well as those in Victoria. Centrepay is currently exploring use of the payments system by pharmacies, particularly for methodone users. Is this a good idea? Let me know what you think.

Please email me your views or experiences at jpentland@each.com.au

Centrepay is in the process of putting together a consultation document which outlines their operational framework. I have agreed to AFCCRA’s involvement in this consultation as well as on-going discussion about our current concerns. I have recommended that Centrepay consider setting up a stakeholders’ advisory process in relation to policy and procedures and financial counsellors would be a key stakeholder group.

Round Up

News, views and information on what’s happening in financial counselling around Australia.

SIRP NEWS

New Legal Advice and Information Resource Service for SIRP-funded Financial Counsellors

Good News!! A new legal advice and information service that is specifically provided for financial counsellors in areas affected by the Sugar Industry Reform Package (SIRP) has just opened at Mackay.

The service has been funded by the Commonwealth Government’s Sugar Industry Reform Program and is being run by the Mackay Regional Community Legal Centre (MRCLC), under the auspices of the George Street Neighbourhood Centre (GSNC) at Mackay.

The service is funded to provide:

A legal advice and information resource service to Financial Counsellors throughout Queensland, funded under SIRP, who provide financial counselling to individuals and families in the sugar industry who are experiencing financial crisis.
Workshops and information sessions for SIRP-funded Financial Counsellors on topics identified by the Financial Counsellors, if required.

In order to implement the service, the MRCLC have enlisted the help of ‘preferred suppliers’ of legal services from amongst legal firms in Mackay. A list of these suppliers is attached.

All of the preferred suppliers have had extensive legal experience as well as developed expertise in the areas of general commercial law, including the area of consumer credit and debt. As Mackay is also a major sugar area, most have had extensive experience with people within the sugar industry.

Those who are eligible to use the service (i.e., SIRP-funded financial counsellors in Queensland) can access the service by contacting any of the solicitors on the list. However, due to funding arrangements, the service will only be available to June 30, 2005.

The service will be overseen by the Project Worker (Christine Comben) who will be responsible for the day to day management of the service, and for making sure that the service provided by the preferred suppliers is meeting the needs of financial counsellors. Any queries, concerns or issues should be addressed to Christine. The contact details are as follows:

Project Worker

Christine Comben: PO BOX 4112; South Mackay, 4740; Phone: (07) 4957 2626; Fax: (07) 4957 6728; Email: mrclc@orion-online.com.au

Preferred Suppliers

Bill Cooper: Bill Cooper and Associates, Solicitors; PO BOX 472; Mackay, 4740; Phone: (07) 4951 3422; Fax: (07) 4951 3022; Email: bcooper@billcooper.com.au
Damian Carroll: Macrossan and Amiet, Solicitors; PO BOX 76; Mackay, 4740; Phone: (07) 4944 0333; Fax: (07) 4957 3346; Email: mac@macamiet.com.au
John Formosa: Macrossan and Amiet, Solicitors; PO BOX 76; Mackay, 4740; Phone: (07) 4944 0333; Fax: (07) 4957 3346; Email: mac@macamiet.com.au
Sean Kelly: M S Kelly and Co.. Solicitors; PO BOX 1035; Mackay, 4740; Phone: (07) 4951 3433; Fax: (07) 4951 4941; Email: mskelly@qldnet.com.au
Fiona Manderson: M S Kelly and Co.. Solicitors; PO BOX 1035; Mackay, 4740; Phone: (07) 4951 3433; Fax: (07) 4951 4941; Email: mskelly@qldnet.com.au

Queensland

Outstanding Website for Queensland Rural Areas

Thanks to David Lawson who sent the details of a really good website put together by the Rural Assist Information Network in Queensland.

The site is at: http://www.rain.net.au/ and contains “information and options to support and sustain people living and working in rural and remote areas of regional Southern Queensland”. The site has been developed by government and community agencies servicing regional Southern Queensland, in collaboration with Diploma of Multimedia students of Toowoomba’s Southern Queensland Institute of TAFE.

It has a wealth of information about the types of financial assistance and financial services (including rural financial counselling) available to rural communities and primary producers. The site also has sections related to personal and family issues, health and wellbeing, environment and climate concerns, on-farm production, employment and training, and disaster recovery. It really is well done, and, importantly, is clearly set out and easy to use.

New South Wales

State Debt Recovery Office (SDRO) fines and bankruptcy

A recent letter tabled at a meeting of the Financial Counsellors Association of NSW (FCAN), was from the SDRO of NSW, indicating to the client of a financial counsellor that:

In 2003 the Federal Court noted that non-court fines such as fines for speeding and parking were NOT provable in bankruptcy.
In 2004, the High Court has refused special leave to appeal the decision
Now that the Appeal has been refused, the Federal Court’s decision stands. That is, non-court fines have the same status as court based fines in relation to bankruptcy; they are not provable and thus not extinguished by bankruptcy.
The SDRO (in this case) had stayed the Enforcement Orders for these debts until this determination had been made. With the High Court decision on the Appeal now made, the SDRO is now taking action on outstanding Enforcement Orders.
The SDRO quoted Mansfield vs. State of Victoria (2004) as the relevant High Court case.

Richard Brading, from Wesley Community Legal Service notes that in fact, the High Court decision in Mansfield was that the Victorian PERIN court (a court in a computer) is effective in taking all PERIN fines outside the scope of the Bankruptcy Act, due to s.82(3). The SDRO letter was clearly incorrect and misleading. A group of N.S.W. community legal centres have since written to the SDRO to point out the error and request a correction. Therefore, the law remains as set out in s.82(3) Bankruptcy Act, namely that penalties or fines imposed by a court are not provable in bankruptcy. If unsure, check with a lawyer.

Access to FCAN website update.

NSW financial counsellors who would like to have access to the ’Members Only’ section of the FCAN website need to obtain an access code. David Bell notes that the procedure to obtain an access code is as follows:

Read the Internet policy that is held in the FCAN policy manual. If you do not have a manual email me on david.bell@centacare.org and I will email you a copy.
Sign the Agreement form that is a part of that policy
Fax the form to Graham Medhurst on (02) 98047743
Graham will allocate a code and send it to you. Please note that Graham is a volunteer Financial Counsellor and works only one day per week.
Any problems signing on email me at david.bell@centacare.org

Teleconference

Unsolicited credit increases, Maternity Payments, and changes to the Child Care Benefit scheme

On March 30, a teleconference was held to discuss issues of current interest to financial counsellors. There were participants from Queensland, Northern Territory and NSW. The discussion centred around three main areas — unsolicited credit increases, Maternity Payments, and changes to Centrelink’s Child Care Benefit scheme.

Unsolicited credit increases

Lyn Park from Lifeline Sunshine Coast/Gympie in Queensland, noted that a 93 year old client, who had been a pensioner for >25 years, had a credit card with an initial limit of ~$3,000.00 that had grown to $37,700.00 through such increases! The group agreed that credit providers are still not adequately warning people of the risks of increased credit limits or adequately reviewing credit provision for many individuals. The specific targeting of such increases (just before Christmas and Easter) was also seen as particularly cynical. The ACT legislation limiting unsolicited credit was applauded by the group, who hoped that other states will look to similar legislation in the future.

Strategies for receiving the Maternity Payment

Serena Staines from Somerville Community Services in the NT noted problems with the ~$3,000 Maternity Payment, (i.e., money spent quickly on consumables and recipients penniless a few weeks later), and the pros and cons of staggering payments versus giving a single lump sum were discussed. Direct contact with Centrelink after the teleconference confirmed that the maternity payment can be paid as a lump sum, as fortnightly payments, or as a combination of both — the recipient just has to ask.

Changes to the Centrelink Child Care Benefit Scheme

Serena also drew our attention to the fact that changes to the child care benefits scheme are soon to come into place. Contact with Centrelink after the teleconference again helped to clarify things. In essence, the changes are that:

People will be able to claim 30% of their out of pocket expenses for approved child care, to a maximum of $4,000.00, in their tax return for the 2005–2006 tax year (i.e., from July 1 2006).
People will also be able to claim for the 2004–2005 tax year in the 2006 tax return (i.e., claim for two years in the same tax return).
The rebate is determined by and paid by the Australian Tax Office, as a tax rebate.
Out of pocket costs are defined as the ‘amount paid for approved child care fees less the customer’s actual Child Care Benefit entitlement’.
From July 1, 2006, the tax rebate is claimed in the succeeding years tax return.
We believe that to claim, people (and their partner if they have a partner) will probably have to be ‘working, studying or training to receive any Child Care Benefit for registered care or Child Care Benefit for more than 50 hours a week of approved care’.
Further information will be available in the 2005–2006 tax pack.

The upshot for financial counsellors is that child care receipts for this tax year should be kept so that they can be claimed in the 2005–2006 tax year.

How to use the BITA calculator to work out likely income contributions.

Basic Income Threshold Amounts Calculator at 20 March, 2005

Step 1. Obtain gross income.

Work out the client’s gross income.

Step 2. Calculate net income.

Calculate the Tax Payable and the Medicare Levy using the guidelines in the tables at the bottom of the page, and work out how much child support or maintenance the client is paying if applicable. Subtract those amounts from the gross income.

Step 3. Calculate assessable income.

Add assessable income items that would increase the net income, such as a fringe benefit. This will give you an estimate of the client’s assessed income for BITA purposes.

Step 4. Calculate income in excess of AITA threshold.

Looking at the column with amount of dependents, find out the AITA (assessable income threshold amount) and subtract it from the clients assessable income.

Step 5. Calculate likely contribution towards bankruptcy.

ITSA will take 50c in the dollar of any excess above the AITA threshold. Divide the excess income over BITA amount by two. This will give the amount of the contribution towards the bankruptcy the ITSA is likely to ask for.

For further assistance, there are actual examples in Sharkwatch Vol. 5 No. 4 — November 2004.

In the Media

Sustenance pot for families denied welfare cash.

Original story by Stephanie Peatling

The Howard Government’s increasingly tough line on the provision of welfare has been a matter of some concern to financial counsellors around Australia. Stephanie Peatling’s article, which is partly reproduced below, does little to allay our fears.

“Up to $42 million has been set aside to cover the basic bills of families whose welfare payments are cut off when the federal Government’s welfare to work system comes into force [from July 1] next year.

… People receiving disability or single parent benefits will face tougher mutual obligation requirements or face the suspension of their welfare payments.

But the government has had to put aside $42 million … to ensure that people will still be able to buy food and pay their bills if their payments are cut off.

Centrelink confirmed in budget estimates last week it had quarantined the money to ensure people would not go hungry or be evicted because they were unable to pay their rent. Department officials told the hearing that people whose welfare payments were suspended would be able to apply to Centrelink to buy groceries, pay bills, rent and medical expenses on their behalf.

Centrelink officials were only able to confirm that it would not spend more than the equivalent of people’s benefits on their expenses. Some of the money will also be spent on back-paying people who are later found not to have been in breach of their mutual obligation requirements, such as attending interviews.”

The article goes on to note the reaction of opposition spokesman on social security, Chris Evans, who said the “measures were cruel and would punish the children of people on welfare”, and of ACOSS director Andrew Johnson, who urged the government to consult community and church groups before it decided how the new breach system would work.

Andrew Johnson also suggested that “at the bare minimum it [the government] should attempt to consult participants before their payments are cut off.”

“While we [ACOSS] support requirements to look for work or participate in employment programs, we need to ensure that the new system will improve people’s job chances and not adversely affect their children”.

The article concludes by noting that “welfare groups are increasingly concerned about the lack of detail available about how the changes will work. Of particular concern is the length of time people will have their payments cut off for. Those found to have breached their mutual obligation requirements will have to go without welfare payments for eight weeks”.

I think that financial counsellors would only agree.

Sydney Morning Herald June 6 2005.

Snake man beats attempted murder rap

“A man who released five venomous snakes in a Johannesburg bank has been acquitted of attempted murder after the magistrate sympathised with his grievances against the manager.

Abel Manamela, a building contractor, walked into the Absa bank in January last year and dumped a bag containing the snakes on the counter, in fury over a long-running dispute about loan repayments and repossession of his car. Bank employees said that Manamela had previously written a letter to them saying that he was going to expose them ‘for the snakes that they were’.

Manamela denied the allegations, saying that he merely intended to frighten the bank staff with the snakes. (Experts later testified that the bite of a puff adder would only kill someone in exceptional circumstances.)

Manamela was found not guilty of attempted murder but was found guilty of an assault charge. The magistrate noted that the bank had made a big profit on the car repossession and had handled the matter badly.

Sydney Morning Herald May 19 2005

Industry Links