The Australian government has secured industry funding commitments for the financial counselling sector totalling around A$30 million, under a new voluntary industry funding model, and will go ahead with the establishment of a not-for-profit body that will collect and distribute the funds.
Industry response was patchy, prompting a call from Financial Counselling Australia for a move from a voluntary to a compulsory industry funding model.
Minister for Social Services Amanda Rishworth announced this week that the government has signed memorandums of understanding with the Australian Banking Association, the Australian Energy Council, the Insurance Council of Australia, Responsible Wagering Australia, Tabcorp, Afterpay and Telstra.
Afterpay is the only buy now pay later company to have signed an MOU and Telstra is the only telco. No finance companies, including big consumer finance businesses like Latitude, have signed. Credit Corp is the only debt buyer or collection agency to sign.
The ABA said in a separate statement that its members will contribute $19 million over three years.
Rishworth said the industry funding would be in addition to around $50 million a year of Commonwealth funding and $30 million a year from the state and territories.
The 2019 Hayne royal commission recommended a more stable funding model for the sector, with industry contributions, as did the 2019 Review of the Co-ordination and Funding for Financial Counselling Services for Australia, chaired by former ACCC deputy chair Louise Sylvan.
The Sylvan review said a lack of adequate funding was the biggest impediment to more Australians in financial hardship being able to access financial counselling. It recommended that industry should contribute funding to address unmet demand for services.
Rishworth said the new funding body would be established early next year. Financial Counselling Australia will work with industry groups to set it up.
The government has provided additional funding to FCA for data collection and analysis that will be used for further development of the funding model.
FCA chief executive Fiona Guthrie said the funding model was a game changer for the sector and a recognition by industry that “the businesses that benefit when their customers receive advice and support from a financial counsellor should also contribute to these costs”.
Guthrie called on industries and companies that are yet to commit to join the funding model. She also called for a move from a voluntary to a compulsory industry funding model as the best long-term solution.