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Sharkwatch, December 2006

INSIDE THIS ISSUE

For telephone support services
(information, casework discussion, debriefing, general support)
National Financial Counsellors� Resource Service Participants phone 1800 647 409
All others phone 02 9951 5514

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Notes and Notices

GE Contact Numbers for Financial Counsellors

Thanks to Jane Palese and John Haywood from NSW for these up to date numbers for contacts within GE:

Hardship (Credit Cards) 1800 220 718
collections.hardship@ge.com
Fax: (03) 9921 6070 (Attention: Hardship Team).
Christina Paradisis (Team Leader).

Hardship (Personal Loans) 1800 220 784
collections.hardship@ge.com
Jodi Bloomfield (Team Leader); Sophany Koy (Loans);
Betty Bindivanos (Motor).

Bankruptcy (All Products) 1300 550 857
collections.bankruptcy@ge.com
Daniella Hayes (Team Leader); Daniel Sullivan; Gail White

Dispute Resolution Department (All Products) 1300 550 006
Stephen Blyth (Dispute Leader - 03 9921 6565)
Ross Fiore (Dispute Officer) Vicky Mistriotis (Dispute Officer) Jasmeen Madia (Dispute Officer) Kanav Khanna (Dispute Officer) Thuy Nguyen (Dispute Officer).

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Consumer Credit Code

Changes to the Uniform Consumer Credit Code 1995, and Consumer Credit Regulation 1995, came into effect on October 9th, 2006, through the Consumer Credit and Trade Measurement Amendment Bill 2006 and the Consumer Credit Amendment Regulation (No.1) 2006.

According to a press release, these changes to the Uniform Consumer Credit Code 1995 (Code) will “facilitate the application of the electronic transactions legislation in each State and Territory to the Code whilst ensuring that consumer protection is not diminished as a result of a debtor transacting in an electronic environment.”

Copies of the amendments can be obtained by accessing the ‘What’s New’ section of the Uniform Consumer Credit Code home page at: http://www.creditcode.gov.au/

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New Financial Literacy Brochure Available

The Australian Government Department of the Treasury, in conjunction with the Financial Literacy Foundation (which is chaired by Paul Clitheroe), have released a new brochure entitled “Understanding money: How to make it work for you”. The brochure includes a fold out money plan, advice on budgeting and obtaining credit, and gives contact numbers in each state for contacting a financial counsellor.

The brochure is also available in multiple languages. and can be obtained by ringing 1800 236 235 or 131 450 if an interpreter is needed.

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CFCP Press Release

Following his excellent address at the June AFCCRA conference in Melbourne, the Minister for Families, Community Services and Indigenous Affairs (FaCSIA), The Hon. Mal Brough, released a statement underlining the Government’s continuing commitment to fund the Commonwealth Financial Counselling Programme (CFCP) to the tune of ~$2.7 million and noting that “it is important that this valuable service continues”.

The Minister also noted that the CFCP funded forty one community and local government organisations to provide financial counselling services, and that CFCP-funded services had assisted 15,000 clients in the previous 12 months. The Minister made particular mention of the needs of “older Australians who are facing debts in their retirement”.

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Money Worries: Working With Clients With Money Issues From an Addictions Perspective

Aurora Hammond
B.SocStud; MA.Psych; Director, College of Holistic Counselling

This article will address ways in which financial counsellors may address their client’s relationship with money from an addictions perspective. I have observed some addictive patterns in clients’ relationships with money that are greatly encouraged by our culture and some that follow similar patterns to food addiction. Just as we must have a relationship and deal with food, we must also have a relationship and deal with money. This means that for someone with an addictive pattern they can’t just “put it down” like alcohol or cigarettes, they must find a way to manage their relationship with money in a sober way.

Worrying about money is probably one of the greatest sources of stress and overwhelm in people’s lives and can even lead to despair and suicide. In a culture that seems addicted to money — gambling, shopping, compulsive spending on credit cards and mobile phones — it can seem hard to avoid some form of money issues, particularly if you are an addict or the child of one.

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Addiction

Adults who have grown up in families where some members have addiction issues often have an unrealistic relationship with money. It is estimated by some that this may be up to a third of the population. Particularly those who grew up with problem drinking can have witnessed spending and behaviours around money that are intricately linked with the pattern of drinking or with paying for an addiction. All addictions cost money and often involve secrecy and acting out behaviours which result in over spending. This usually leads to conflict and anxiety in relationships and in the home.

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Denial

The thinking patterns that develop while living with active addiction can have a huge impact on dealing with finances. For example: denial. Not knowing how much it costs to live your life every month, not knowing that you are living beyond your means even while living pay to pay, are some hallmarks of denial around money. Another huge one is not knowing where the cash has gone that was in your wallet, a feeling of it just slipping through the hands. People can spend a lot of time ruminating and trying to recall where the money has gone with a feeling of panic and incompetence at not being able to remember, and surprise that all those small amounts added up to so much.

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Vagueness

Another hallmark of addictive thinking is vagueness. People get a shock every month when the same bills come in, even though they may have been paying these bills for twenty years! They cannot retain the numbers and dates in their heads or even on a calendar of how much things cost and when the payments fall due. There is often an inordinate feeling of pride when the bills are paid that is still there when the bills are due to be paid again, resulting in a feeling of “I just paid these, don’t tell me they want money from me again!”

This may seem irrational (and it is), however when I give public talks and identify this thinking pattern there is always a lot of laughing , smiling and nods of recognition around the room. A similar recognition in the room occurs when I describe the bewilderment created by the reality of the credit card statement coming in. I really believe I have paid for things when I hand over the credit card, I often don’t write down what I have paid for and I certainly don’t add it all up.

Yes, my intimate knowledge of this subject comes from my own lived experience so I can assure you that perfectly intelligent, rational people can behave in these irrational ways. (I am imagining that someone who is a financial counsellor is not similarly afflicted and may find all this incomprehensible.)

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Similarities between financial addictive behaviours and eating disorders

I have further developed my ideas as I looked at the similarities between financial addictive behaviours and food addiction and I have observed some similar patterns in people’s relationship to money.

Anorexic pattern:

In this pattern a person does not like to spend money even when it is necessary to pay bills etc. People Such people will never spend money on themselves and only feel secure when they can see a certain amount of money in the bank — they are unwilling to let it go even when it is needed.

Bulimic pattern.

This seems to be related to compulsive spending. It involves a binge in unplanned spending without knowing if there is money to pay for purchases, usually using a credit card or some form of unsecured debt. Guilt and remorse follow the spending, along with anxiety about where the money will come from, leading to a period of abstinence or purging where no money is spent and there is pride in not spending. After a period of weeks or months the feelings of deprivation get too strong leading to another binge to compensate for going without, “I deserve this … I’ve been so good.”

Compulsive over spending.

This pattern involves chronic spending of money the person does not actually have, using credit cards, money borrowed from friends, pay advances etc. This can lead to huge and unmanageable credit card debts, gambling in the hope of paying off the debts, bankruptcy, stress and family break down. This form of spending addiction is often linked to financing other addictions.

As in other addictive processes people may move from one spending pattern to another at different times in their lives depending on their circumstances. One constant feature, however, is a constant underlying fear about money that they may not even be aware of.

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Solutions and treatment

Again, drawing a parallel with food addiction, the common approach to dealing with food problems is dieting; for money issues the common solution is budgeting. As we know, however, when treating addictions, these control-based approaches are often not the answer. Unless we can find some way to address the underlying addictive process, control solutions may well lead to the binge/purge cycle. This has been researched and observed very well in relation to food and dieting and I believe that the same dynamics may well operate in relation to money.

If you observe these behaviours in some of your clients I would recommend referring them for counselling with someone who uses an addictions framework and asking them to speak to the counsellor specifically about their relationship with money. One way of exploring this can be to look at family of origin issues.

I think it can be extremely valuable to explore messages about money and spending from both of the client’s parents. Clients may be unconsciously acting out money patterns from their family of origin, or reacting against them. In addictive family systems leaving this unexamined can only lead to trouble.

I would also recommend a twelve -step programme where people can get support with these issues and learn new tools for dealing with them.

The programme that deals with compulsive ‘debting’ and spending is Debtor’s Anonymous (DA) and there are currently three meetings in Sydney. The Sydney contact number for D.A. is 02 9358 3536 There is also a website www.debtorsanonymous.org, which has information and also details for phone meetings in the U.S.A where D.A was founded more than twenty years ago. These meetings can be very helpful as there is an enormous amount of recovery to be heard there.

Aurora Hammond trained for Social Work at Sydney University before completing a Masters Degree in Psychology at Antioch University in the US. She has been in private practice for over 20 years, is the Vice President of the Counsellors And Psychotherapists Association of NSW, and is the founder and director of The College of Holistic Counselling at Artarmon where she runs one-day workshops on Making Peace With Money. For more info phone 9904 6748 or go to www.collegeofholisticcounselling.com.au. The College also operates a student clinic which provides low-fee counselling from an addictions perspective.

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New Bankruptcy Checklist

Included with this issue of Sharkwatch is a new Bankruptcy Checklist with the additions suggested in Richard Brading�s article in last quarter�s Sharkwatch (Volume 7, Number 3, September 2006) titled “Bankruptcy and Transferring the Home II”.

Richard writes:

“ I suggest that financial counsellors add these questions to any bankruptcy checklist that they are currently using.

“ It may be difficult to find out this information. In some cases the client won’t know the correct answer. At the very least, clients should be warned of the possibility that a claim may be made against the home, or that they may have a potential claim against the bankrupt estate”.

It may also be valuable to refer to the relevant Sharkwatch article when using these new items. That issue is available online at: http://www.wesleymission.org.au/centres/creditline/sharkwatch.asp.

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Wesley Mission Report

Financial Stress and Its Impacts

In November, Wesley Mission released its report entitled “Financial Stress and Its Impact on the Individual, Family and Community”, which documents the financial experiences of 400 individuals from the Sydney Metropolitan area.

The report found ‘concerning’ levels of financial stress, with 33% of respondents anxious about their ability to meet expenses for the coming year, 40% unable to meet an unexpected one-off expense of $2,000, and 81% reporting some level of financial stress over the past 6 years.

Around 33% of households felt they were not managing their finances well and only 38% kept to a budget.

When faced with financial stress, the most common response was inaction, with only 17% taking remedial action such as budgeting or seeking expert advice.

The report provides valuable data on a number of areas that are of interest to financial counsellors and provides clear evidence that financial stress is widespread and having an adverse impact on many Australians. The report is available from www.wesleymission.org.au.

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Maternity Payment and Bankruptcy

Bob Cruickshank
NSW Deputy Official Receiver
Insolvency Trustee Service of Australia

Sharkwatch received the following information about the Maternity Payment and bankruptcy from Alick O’Har. The original advice is from Bob Cruickshank, the Deputy Official Receiver in NSW.

“As we have been receiving a number of enquiries about the above topic (i.e., the Maternity Payment and Bankruptcy), I have prepared and enclosed a short note on the topic.

The maternity payment is not included as ‘income’ for income contribution assessment purposes in bankruptcy.

The Maternity Payment (which replaced the “baby bonus”) is paid under the New Tax System (Family Assistance) Act1999 and New Tax System (Family Assistance) Administration Act 1999, Reg. 6.12C of the Bankruptcy Regulations, which prescribes that such payments are not classed as income for income contribution purposes.

Likewise, a Maternity Payment received by a bankrupt’s wife, will not be classed as income in her hands when determining whether or not she is a ‘dependant of the bankrupt’ for his income threshold purposes.”

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Protecting Your Financial Identity

Elizabeth Terry, a financial counsellor from Wesley Counselling Services in NSW, has sent Sharkwatch the details of a website which gives information about protecting your financial identity.

The website has been developed by the Australian Bankers’ Association, the Australian High Tech Crime Centre and the Australian Securities and Investments Commission. The website provides a fascinating insight into how these groups work to reduce the incidence of crimes relating to the misuse of others’ financial identities and can be accessed on the internet at www.protectfinancialid.org.au.

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Limitations No More ??!!??

Richard Brading
Principal Solicitor,
Wesley Community Legal Service

The Full Federal Court has permitted a creditor to bankrupt a debtor on an old debt that appeared to be statute-barred under the NSW Limitation Act 1969.

Section 17 of the Limitation Act states that “an action on a cause of action on a judgment is not maintainable if brought after the expiration of a limitation period of twelve years”.

All States and Territories have laws limiting actions on judgments, but there are differences between them. Until now, everyone thought this meant that creditors had only 12 years to collect their judgment debts (15 years in Victoria and South Australia).

O’Mara Constructions obtained judgment against a Mr Avery on 21 February 1992 for $147,899.60. A bankruptcy notice was issued on the 12th of November 2003. An application for substituted service was made on the 26th of February 2004, and service of the bankruptcy notice was effected on the 12th of March 2004. On the 21st of April 2004, the debtor applied to set aside the bankruptcy notice but was unsuccessful.

A creditor’s petition was presented on the 3rd of September 2004 and dismissed by a magistrate on the 5th of July 2005. The creditor then appealed to the Full Federal Court, which reversed the magistrate’s decision and made Mr Avery bankrupt. Their judgment is O’Mara Constructions Pty Ltd v Avery [2006] FCAFC 55 (4 May 2006).

Essentially the Federal Court said that bankruptcy proceedings are not restricted by s.17 of the Limitation Act 1969 (NSW) because they are outside the definition of “an action on a cause of action on a judgment”. The Federal Court took the view that execution of a judgment was not an “action on a judgment” and therefore could take place after the 12 year limitation period had expired.

Although the Federal Court was only concerned about the use of bankruptcy proceedings, its views might apply to the execution of judgments in the State Courts to collect debts such as levy of property or garnishment.

The judges gave no consideration to the implications of their judgment upon the poorer members of the community for whom it may mean a life sentence of debt.

It is possible that the case will go on appeal to the High Court. Until that happens, courts will have to follow the O’Mara Constructions judgment.

What this means is that creditors are not restricted by the 12-year* limitation period in regard to taking bankruptcy proceedings to collect old debts. However, creditors will have to get around s.41(3)© Bankruptcy Act which precludes the issue of a Bankruptcy Notice on a judgment more than 6 years old.

No doubt this will come as a very pleasant surprise to the debt collection industry but a shock to many clients of financial counsellors.

Note: see Lo Surdo, A. “Can a Creditor’s Petition be Statute-Barred?” Law Society Journal Vol 44, No.8, September 2006 p. 52

* This figure is 15 years in Victoria and South Australia

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NAB Reduces Fees For Low Income Customers

Below is a press release from NAB regarding their new concession account:

“The National Australia Bank has announced a new account to cut banking fees for customers who hold government concession cards.

From 25 September 2006 NAB will offer a Concession Card Account with:

• No monthly account service fees
• No NAB transaction fees
• No reference fees
• No fees for dishonoured transactions
• No fees for failed periodical payments

The NAB note that additional information can be obtained from Rebekah Miles from the NAB Corporate Affairs department. Her email address is rebekah.miles@nab.com.au.

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The Law Matters

Richard Brading
Principal Solicitor,
Wesley Community Legal Service

1. Going to the Federal Magistrates Court

Debtors who receive a creditor’s petition often ask whether they should attend court and if they need a lawyer. The answer depends on their individual circumstances, but for some there is a definite benefit.

The Federal Magistrate’s Court is simpler and more accessible than the Federal Court, and legal representation is not necessary (although it would be helpful). Procedural information is found in the Federal Magistrates Court (Bankruptcy) Rules 2006 (the Rules).

If a debtor wishes to be involved in the court proceedings they must file a Form 4 Notice of Appearance. If they don’t have legal representation, they should leave the “Solicitor” section blank.

Opposing a Creditors Petition

If a debtor intends to oppose a Creditor’s Petition, or any other application, then the debtor must also file a Form 5 Notice Stating Grounds of Opposition to Application, Interim Application or Petition. In this form, the debtor must provide reasons why the order is opposed. An Affidavit in Support of the grounds of opposition must also be filed. These documents must be filed and served at least 3 days before the court hearing.

It is recommended that debtors who simply want more time in which to pay a debt file both a Form 4, Form 5 and Affidavit opposing the Creditors Petition.

There is no fee for filing a Form 5 and opposing a Petition. However, if the client is unsuccessful, then it is likely that costs would be awarded against the client. Those costs are provable in the bankruptcy.

It is important that the client understands that the making of a Sequestration Order does not finish the matter. The client must lodge a Statement of Affairs as soon as possible after a Sequestration Order is made. The client will not be eligible for normal discharge from bankruptcy until 3 years after the Statement of Affairs is filed.

Setting Aside a Bankruptcy Notice or seeking an Extension of Time

Where a debtor wishes to avoid committing an Act of Bankruptcy, the debtor should apply to set aside the Bankruptcy Notice or seek an Extension of Time in which to pay the debt. In this case the debtor needs to file a Form 2 Application and an Affidavit in Support.

There is a filing fee of $350 which may be waived for debtors in financial hardship. The Application must state the sections of the Bankruptcy Act or Regulations under which the proceeding is brought and what relief is sought (e.g. Bankruptcy Act s.41(6A), (6C) and (7).

The Application must be accompanied by a copy of the Bankruptcy Notice, an Affidavit stating the reasons why the debtor wants the bankruptcy notice set aside and stating the date when the bankruptcy notice was served, and any other documentation relied upon.

For example, where the debtor is selling property that will enable them to repay the debt in full, the debtor should file a Form 2 Application seeking an Extension of Time. An Affidavit in Support also needs to be filed, which sets out exactly what is happening with the sale of the property, how much net will be received and when it is anticipated that the sale proceeds will be available. Copies of documents supporting the information should also be filed (e.g. Agent’s Sales Advice Note).

Further assistance

Court staff will provide limited practical assistance about filling in forms and information about procedural matters, but are strictly prohibited from giving legal advice. Hence debtors must do their homework carefully before going to court.

The court will usually provide an interpreter for persons who do not speak English and are involved in defended matters, particularly if they are Aboriginal.

Unfortunately the court does not provide interpreters for persons who are involved in undefended matters. They will need to arrange their own interpreters. The court also provides some assistance to persons with a disability. Contact the court registry for details.

Further information about the Federal Magistrates Court is found in the Federal Magistrates Court Rules 2001.

For more information, go to the court’s website www.fmc.gov.au and look under the Bankruptcy heading. All the legislation is available on www.austlii.edu.au.

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2. Permanently Cooked

The recent decision of the N.S.W. Supreme Court in Permanent Mortgages v Cook [2006] NSWSC 1104 gives new hope to those who are forced to take out loans of increasing size because they can’t afford their repayments.

Ingredients for failure

Michael and Karen Cook were an ordinary couple who lost the Australian dream, with help from a cast of brokers, lenders and lawyers. In 1992 they bought a block of land and built their dream home, with a loan from St George of $53,000. They then refinanced with AGC, and again with the Commonwealth Bank, followed by a couple of private lenders arranged through Wizard Home Loans for $138,000. Their sixth loan was a refinance with Liberty Financial for a one year period. They took out a loan with Cash King to pay the interest to Liberty Financial and then in March 2003 they fully refinanced with a couple of loans arranged by Cash King totalling $245,000.

The larger Cash King loan of $200,000 was lent by Permanent Mortgages at 13.8% (reduced to 8.8% in the unlikely event of the borrowers staying up to date). Lots of fees and penalty interest was added along the way. The reality was that Mr Cook had a lengthy time off work due to illness and the Cooks were unable to service their repayments from the time of the Commonwealth Bank loan some 3 years earlier.

Business Purpose Declaration

The Cooks signed a business purpose declaration because they were desperate to get the loan and save their home. However, the lender knew that the Cooks were refinancing a mortgage in default over their home and didn’t have a business, so the lender should have known that the business declaration was false. The ‘substance and reality’ of the transaction in this case is more important than the piece of paper. This meant that the transaction was regulated by the Consumer Credit Code.

In order to take enforcement proceedings against the Cooks, the lender was required to send them a default notice under s.80 Consumer Credit Code. Although disputing that the transaction was regulated by the Code, Permanent Mortgages sent a s.80 notice just to be sure. That meant when Permanent Mortgages lost their business purpose declaration argument, their enforcement action was still valid, and they were entitled to take possession of the Cook’s home and sell it.

Affordability

Cash King produced a letter from an accountant who had never met the borrowers, who claimed that “the Mortgagor is able to pay the interest on the loan and repay the principle in accordance with its terms and can do so without substantial hardship.”

The court did not accept that the Cash King loans were affordable.

Was the contract unjust?

The Cooks sought to have the mortgage contract reopened under s. 70 of the Code on the grounds that it was unjust. They had retained a solicitor to advise them before signing the mortgage, but had received poor advice. Although English was their first language and they had considerable experience in borrowing money, both secured and unsecured, they were of limited education and relatively unsophisticated. Expert evidence was provided that the Cooks could not have serviced the loan repayments on their current income.

What is a Ponzi loan?

A Ponzi investment scheme is one in which investors are promised fabulous returns on their money, but the earlier investors are actually paid with the funds invested by the later investors. Eventually the Ponzi scheme collapses.

In Permanent Mortgages v Cook, the expert witness described the mortgage transaction as a “Ponzi” loan, namely one which “can only be repaid by either taking out a larger subsequent loan, or by selling the asset that was financed using the loan”. The expert said “were the practice of Ponzi Lending to become widespread, it would substantially increase the tendency of the Australian financial system to asset bubbles and subsequent financial crises by accelerating the accumulation of excessive debt during the up-swing to an asset bubble, accelerating the rate of decline during the bursting of the bubble and causing the recovery to take much longer.”

The judge accepted this evidence and agreed that the transaction was unjust.

The result

The Cooks lost their home as Permanent Mortgages obtained their order for possession. However, the court reduced the amount of money that Permanent Mortgages could recover to the amount originally lent to the Cooks, plus interest at the lower rate of 8.8% (instead of the default rate of 13.8%). Also, the Cooks were not to pay the costs and expenses claimed by Permanent Mortgages after default.

Comment

Clients who have entered into loan transactions which they cannot realistically afford to service should be encouraged to seek legal advice about their chances of success under a s.70 Code application. They may not be able to keep their homes, but they have a chance of reducing their overall debt.

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Trustees� Fees

Jan Pentland

Eastern Access Community Health (EACH) has received funding from the Consumer Credit Fund for research on the fees charged by Registered Trustees in Bankruptcy. A written report based on the research will be part of the consumer movement’s input into the review of trustees’ remuneration which ITSA will undertake in early 2007.

The issues of particular concern to financial counsellors and consumer advocates are:

• Fees charged to consumer bankrupts when administration of the bankrupt’s estate is outsourced to a private trustee. While there may be no return from the estate, the trustee can charge a fee which in our experience varies from $1500 to $2000. This debt does not vest in the bankruptcy and can be collected through the civil debt collection process.
• Instances where creditors and/or debt collectors bankrupt debtors who have equity in a property (usually the family home) on small debts. The administration is undertaken by a private trustee nominated by the bankrupting creditor and most of the equity in the house will be eaten up by the trustee’s fees.

If you have any cases like this, or any other concerns about private trustees, I’m keen to hear from you. Email me at jpentland@each.com.au or ring me on 0407 042 483. I’ll make a time that’s convenient to you to talk with you. You won’t have to write up a case study or anything — I’m happy to do that.

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Launch of FCAN Training Package

On 15th November 2006, the Financial Counsellors’ Association of NSW (FCAN) Training Package was launched by the NSW Minister for Fair Trading, Diane Beamer. Development of the package was jointly funded by the NSW Office of Fair Trading and FCAN.

The launch was held at NSW Parliament House and attended by financial counsellors from across NSW as well as a number of agencies associated with financial counselling such as EWON, Energy Australia, Integral Energy, Sydney Water, ITSA, OFT, RGF, Mission Australia, ASIC, Wesley CLC and others.

The FCAN President, Tony Devlin, opened the program and Dr Betty Weule, the FCAN Training Co-ordinator, gave an overview of financial counselling in NSW. An outline of the Training Package was delivered by the Training Package Co-ordinator, Greta Hunter. The Package was then officially launched by The Hon. Diane Beamer, MP.

The efforts of the Training Package sub-committee (Betty Weule, Greta Hunter, Kevin Howard, Steve Snelgrove, Vicki Geraghty, Annabel Mayo and Jennifer Gracie) were also recognised at the launch.

FCAN noted that it has had Accreditation for financial counsellors in NSW for over 25 years, but that recent standards have necessarily increased as the profession of financial counselling has become more complex. Until now, financial counsellor training courses have required Accreditation every two years. With this package, FCAN has synthesised and formalised these courses into a single, standardised Training Package that has been designed to be long lasting and to meet the needs of an increasingly complicated and demanding profession over the coming years.

Those who train using the package are required to be approved by FCAN and must be experienced financial counsellors with a Certificate IV in Workplace Assessment and Training.

The Training Package can be used by any of FCAN’s Accredited Trainers but still allows flexibility in how the subjects are taught. This allows for differences in training financial counsellors from city and regional areas as well as the possibility of training people needing specific requirements such as working with Indigenous and CALD services, Corrective Services, etc.

The Training Package is very practical and covers, in depth, the 25 modules of knowledge that a financial counsellor would need to practice.

It can be presented on a one day per week basis as well as in blocks one week at a time with periods in between for trainees to complete the required assignments. There is also an element of Distance Education within the Package.

As part of Accreditation, FCAN also requires financial counsellors to complete a Basic Counselling Skills course. This is not included in the Package as there are a number of suitable Counselling Courses already available.

While it was important to get the Training Package up and running there are a number of sub-committees now working on various projects to make the package even more useful to trainers and trainees. These include the development of six of the modules for delivery using interactive DVD and other electronic methods, the collection of resource materials, distance education, and pursuing VETAB Accreditation.

FCAN’s Training Committee Co-ordinator, Dr Betty Weule says, “I believe this program will provide a model for financial counselling training in this country. It provides something that is not currently available — a practical, skills based program that will enhance financial counselling practice. We would be happy to make this available to the committee re-evaluating the current National Training Package and to assist them in their evaluation of the financial counselling practice units.”

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Training Package Launch

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Richard Brading: NSW Consumer Advocate of the Year

Talking to Richard Brading I can almost feel the excitement. Richard is in his best suit at the 2006 NSW Fair Trading Awards. The venue is the Powerhouse Museum, and James O’Loughlin from the ABC is the night’s MC. Richard has been nominated for the Minister’s Award for Consumer Advocacy — the consumer advocate of the year for 2006 — but the award is the last for the night. With his usual humility, Richard is not expecting to win the award, and has waited nervously throughout the night’s proceedings. To his great surprise, James O’Loughlin announces:

“The Winner is ...... Richard Brading from Wesley Community Legal Service”.

Then, the Minister for Fair Trading, the Honourable Diane Beamer, MP, steps up to present her Award, and Richard steps forward in a state of mild shock.

The citation was as follows:

“Richard Brading has been a passionate consumer advocate for vulnerable individuals over the last 12 years. He has tirelessly run cases for consumers’ credit matters and gambling problems, resulting in improvements in the practices of clubs to deliver responsible gambling. He is the Principal Solicitor at Wesley Community Legal Service, providing information and counselling for consumers in financial hardship.”

Richard made a brief speech, thanking the Financial Counsellors’ Association of NSW (FCAN) for the nomination and using the opportunity to note the value of financial counselling and to suggest that further funding for financial counselling would be an effective and important social investment.

It was a great night for Richard, and a well deserved recognition of his work with NSW consumers.

Such ceremonies are constrained for time, of course, and are thus unable to provide detailed descriptions of the careers of those nominated for awards. Richard’s citation, whilst accurate, was also necessarily brief and barely scratches the surface of Richard’s service to the community in recent years.

Richard has not only helped many thousands of clients with legal problems related to finances and gambling, he has effectively resourced financial counsellors and gambling counsellors throughout that time, has made important submissions regarding both State and Federal Legislation, has represented consumer interests at various important forums, has co-written valuable books for practitioners in the field, and has done all of this with a grace and a humility that is rare from legal practitioners. Richard’s skill, professionalism, solution-focused approach and helpful, caring attitude have made him greatly respected by financial and gambling counsellors alike across Australia.

The community legal service the Richard heads has moved to having a greater gambling focus in recent years; and is thought to be the only community legal centre in the world that specialises in problem gambling.

Apart from work in our sector, Richard has been the President of the Self-Help for the Hard of Hearing (SHHH) group for almost a decade and has also been a member of FCAN as a credit advocate for 10 years.

Richard sees his greatest achievement as working in a multi-disciplinary way with financial counsellors. “Too often”, he says, “lawyers put themselves up on a pedestal and treat professionals such as financial counsellors as not being equals. In my experience, financial counselling has a greater impact on providing practical solutions to people’s financial crises than lawyers have”.

Congratulations Richard — you are a champion!

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AFCCRA Bankruptcy Update

Jan Pentland AFCCRA representative on the Bankruptcy Reform Consultative Forum

Reform of Part IX of the Bankruptcy Act

Phillip Ruddock’s opening address to the Bankruptcy Congress in July included the proposed legislative changes to Part IX of the Bankruptcy Act (Debt Agreements). I understand that the Bill is prepared and will be presented to Parliament and enacted early in 2007.

These changes to the Bankruptcy Act are to be implemented on 1 July 2007 and will have a substantial effect on the behaviour of debt agreement administrators. I understand that ITSA will provide a paper in regard to registration of administrators which is mandatory from 1 July 2007.

A fee of $275 is likely to be introduced to lodge a debt agreement proposal. This reflects the cost of this work to ITSA and unlike debtors’ petitions, it will not be funded by taxpayers. Bankruptcy is seen as a right rather than an option which is the rationale for payment of administration from the public purse. From our sector’s point of view, if a debtor is not able to find the $265 to lodge a debt agreement proposal, it’s unlikely that a debt agreement is viable and the right option for them.

Confirmation for me that the reform of Part IX is working after 1 July 2007 will be a reduction in the numbers of Debt Agreements overall, and a reduction of administrators as those operating on the margins leave the industry. There is also pressure on creditors to make commercial decisions and be more prepared to accept realistic offers as the best offer a debtor can make rather than selling debts for as little as 8 cents in the dollar and starting the debt collection hassle again for our clients.

Bankruptcy Reform Consultative Forum

The Bankruptcy Reform Consultative Forum met in Sydney on 9 November to consider further work to be undertaken by ITSA and the Attorney General’s Department.

Issues discussed at the meeting include:

• IPAA is reviewing its Codes of Practice;
• Bankruptcy numbers are increasing as are Debt Agreements;
• ITSA continues to regulate debt agreement administrators and has ruled 7 as ineligible over the last 2 years;
• ATO is outsourcing its debt collection to Dun and Bradstreet to enhance collection. However, the ATO representative says that the ATO is keen to assist debtors to avoid bankruptcy;
• Of interest to our sector is the review of Trustees’ fees. This is likely to be a minimal review and I’ll keep you informed of the progress. See elsewhere for the research project being undertaken and ways you can help. Contact the ATO for release forms if there is a good case for a release. The ATO debt collection policy is available at www.ato.gov.au;
• CUSCAL, the peak body for credit unions is now called ABACUS;
• Peter Dunlop is the new President of the Debt Agreement Practitioners Association (DAPA) — Fox Symes is not a member of DAPA. Jocelyn Mumme, an administrator from Perth, has been attending the Consultative Forum to represent administrators;
• Submissions on the Offences Review have been received including three from the financial counselling sector;
• The Bankruptcy Legislation Amendment (Superannuation Contributions) Bill is likely to be introduced into Parliament before the end of 2006 to be debated in 2007 (note: it was introduced on 6 December).

Trustees Fees will be reviewed by ITSA in 2007 (see page 11 for information on a current research project).

Issues raised by Richard Brading and me included bankrupts being contacted by creditors and debt collectors after bankruptcy. This will be pursued with ITSA.

I recently trawled the ITSA website and noted the increase in prosecutions under the Bankruptcy Act. These are fairly blatant cases and hopefully our clients don’t find themselves in these positions but it is a reminder that ITSA is being much more vigilant and the prosecution unit is very active. There was also a media release on the cancellation of a trustee’s registration which is a rare event, and a jail term for a failure to provide documents.

If you would like to discuss any of the above, please ring me on 0407 0424 483 or email me at: jpentland@each.com.au.

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Round Up

Western Australia

FCAWA Conference Report

It was a great delight to attend the Annual Conference of the Financial Counsellors’ Association of Western Australia (FCAWA) this October. The conference was a cracker, and a real credit to the organisers Pam Hartcher and Marianne Mayer (among a large cast of others). I was particularly impressed by the enthusiasm of the WA financial counsellors, who attended sessions on all five days in such large numbers that additional seats were required for every session. The sessions themselves were excellent, covering a wide range of relevant topics including “Welfare to work”, “Centrelink prosecutions”, “Working with mental health clients”, “Legal aspects of working with clients with disabilities”, “Reverse Mortgages/Book Up”, Self-care and boundaries in counselling”, and “Domestic violence”, to name just a few. In addition a variety of high quality consumer resources were launched and two serious issues (accreditation and family law) were discussed by expert panels. Ian Macdonald ran a particularly entertaining and informative interactive session on credit and debt cases. This FCAWA is well known for providing a terrific environment for conference delegates, and this conference was no exception. The venue was great, there were plenty of high quality resources provided, the food was wonderful, and the outing to the Swan valley wineries was delightful. At the Annual General Meeting, Marianne Mayer was returned as President, with Robert Hayes also returned as Vice-President. Sandie Groves is the new AFCCRA representative from WA. On a more personal note, I just wanted to thank Marianne Mayer for her wonderful hospitality. Marianne and her husband Bruce welcomed two speakers (Betty Weule and myself) into their home as guests for the duration of the conference. They were warm, generous and entertaining hosts despite the huge pressures on their time. Thanks Marianne and Bruce, and thanks to FCAWA for a terrific conference. Wayne Warburton.

Movements

Jacquie Ecclestone has joined Abdulla Adam at the City of Wanneroo Financial Counselling Service, Pauline Field is the new financial Counsellor at the Kimberley Community Legal Service at Kununurra, and Susy Griffiths has been appointed as the financial counsellor at the Pilbara Community Legal Service at Roebourne.

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New South Wales

Free immigration advice and assistance

Elizabeth Terry has written to Sharkwatch noting that free immigration advice and assistance to financially disadvantaged people in NSW can be obtained through the following advice services:

The Immigration Advice and Rights Centre

Phone:

2pm–4pm Tuesday and Thursday 02 9281 8355

Drop in:

Monday 6pm to 9pm: level 4, 414 Elizabeth Street (near Devonshire St) Surry Hills.

Wednesday 6pm to 9pm: Parramatta Migrant Centre 15 Hunter Street Parramatta.

Information is also available from their website at: http://www.iarc.asn.au/advice/index.html

Awards

Congratulations to Richard Brading of Wesley Community Legal Service for receiving the Minister’s Award for Consumer Advocacy at the 2006 NSW Fair Trading Awards. This award makes Richard the NSW consumer advocate of the year and is a well deserved recognition for his outstanding work over the past decade and a half. See the full story on page 12.

Congratulations also to Kel Knox, a long time financial counsellor and gambling counsellor from NSW, who now works as a Housing Policy Officer for Indigenous Australians. Kel has just been awarded his PhD from the University of Western Sydney for his thesis about issues facing indigenous Australians.

A final congratulations to Wayne Warburton of the Commonwealth Financial Counselling Programme Resource Service, who recently received the ‘Higher Degree Research Excellence Award’ for the quality of his doctoral research on aggressive patterns of thought at Macquarie University in Sydney.

AFCCRA Update

Jan Pentland, Victorian representative

AFCCRA Annual General Meeting

The AFCCRA AGM was held by phone link up on 11 December. The annual report will be posted on the AFCCRA website soon afterwards.

AFCCRA Council

In the last year we have welcomed three new Council representatives — Sandie Groves from WA; Elizabeth Terry from NSW; and Fiona Hawkins from Queensland. Thanks to Tony Devlin, Gregory Mowle, Lola Mashado and Joanne Lowth for their contributions.

With increased expectations from AFCCRA’s higher profile, resources continue to be a problem. The opportunity presented by the current discourse on financial literacy, concern about the ever increasing indebtedness of Australians, and recognition of financial counselling by decision makers must not be missed if our sector is to survive and grow.

AFCCRA Conference in Sydney in 2007

The dates for AFCCRA’s events for 2007 have been finalised. The AFCCRA Conference will be held in Sydney on 25 July 2007. We hope that this will be followed on 26 July 2007 by another Financial Literacy and Inclusion Forum (FLIF) given the very positive response to the FLIF in June this year. We are currently exploring possible sponsorship and a draft program.

The External Disputes Resolution Schemes’ Consumer Representatives Forum will be held on 24 July 2007 preceding the AFCCRA Conference. AFCCRA Council very much appreciates the support of the EDR Schemes and the ANZ for our conference. After being held in Melbourne for several years, these events are being held in Sydney to enable more NSW financial counsellors and consumer advocates to attend. Please put these dates in your 2007 diaries.

AFCCRA’s priorities in 2006/07

AFCCRA is working hard on our priorities for 2006/07 and making some progress despite our lack of resources. These priorities are:

1. To build capacity in the financial counselling sector;
2. To enhance Financial Counselling Professionalism;
3. National policy issues: such as bankruptcy, hardship policies, debt collection, issues with Centrepay and Centrelink.

Further relevant information about AFCCRA and financial counselling is available on www.afccra.org as we continue the updating of the website.

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In the Media

Spanish Inquisition Pales Compared With Today’s Call Centres

Paula Stevenson

“I’m sure you’ve all been there: the slow trawl through the menu of the water/gas/electricity/telephone company, trying to choose the number that correlates to your inquiry, or trying to negotiate the semantics of the voice-recognition service. Finally a non-recorded voice answers and starts an inquisition to establish your identity.

Yesterday I was stopped in my tracks by the customer service operator asking me for my date of birth, which I duly gave. “I’m sorry,” she said, “that’s not your date of birth.”

I laughed. “Of course it is,” I replied. “Not what we’ve got here,” she answered. “Well what have you got,” I asked. “I’m sorry I can’t divulge that,” she said, “because we can’t identify you.” “Well,” I asked, “am I older or younger? I’ll take the later date.” She remained stern.

I began to get truculent. “Look,” I said, “I just want to sort out an account, to help you out, really.” “I’m sorry,” she repeated, “we can’t go any further.” I grumbled and muttered under my breath.

She sighed. “Would you like to speak to my team leader?” “Love to,” I replied. He came to the phone and explained, at length, the privacy policy and the legal obligation of the corporation.

“That’s great,” I said, “but just because you’ve made an error and recorded my date of birth incorrectly, I can’t get anywhere.” “Well,” he said, “you could take your driver’s licence to our nearest office and we could check your identity there.” I groaned. We live in the country, more that 60 kilometres from the nearest large town.

“You’re joking,” I said.

“I’m sorry,” he apologised again, “but we can’t proceed because we can’t establish your identity.” “What date do you have?” I asked. He was tight-lipped. This was being recorded for quality and training purposes.

“But,” I protested, “I rang last month about the same matter and the person I spoke to didn’t seem to have the same issue.” Apparently she didn’t follow the correct protocol and was happy with my name and address. She’d probably been sacked.

“We just can’t identify you,” he insisted. I rattled off my names, address, mother’s maiden name, my height, weight, blood type and cholesterol level, but it was not enough!

I remembered my mother had always lied about her age (took years off) and she never had any trouble at all with any corporation.

But I am destined to have to battle the privacy laws and I can see that as I become a grumpier old woman, I may just become a public nuisance.”

Sydney Morning Herald 6.12.06
(From Heckler. Your Say, Your Spray)

Asset Rich Flock to Reverse Mortgages

Original story by Jessica Irvine

This story notes that “the number of asset-rich but cash-poor retirees borrowing against the value of their home to finance spending has doubled over the past 18 months”, and that 19 mainstream lenders now offer reverse mortgage products.

The story further notes that a “survey has revealed more than 20,000 households have reverse mortgages”, with the average age of borrowers falling.

The article quoted Greg Tanzer from ASIC, who suggested that potential borrowers should carefully read the fine print of reverse mortgage contracts and “think carefully about how the interest accumulating on their loan would snowball over time”. He also noted that “borrowers should check whether their lender provides a “no-negative-equity guarantee”, which means the borrower would never end up owing more than their house was worth”.

Sydney Morning Herald, October 20, 2006

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