Financial counsellors help ease debt stress
By Leni Mex
If you are over your head in debt or just confused about your finances, you may want to consider seeking help from a financial counsellor.
Financial
Counsellors provide free
financial support for people facing financial difficulties,
and the
Australian Parliament recently passed legislation that
safeguards this resource for Australians struggling with
financial woes.
The new bill restricts the use of the terms "financial counsellor" and "financial counselling" to protect what Fiona Guthrie, executive director of Financial Counselling Australia, said is a profession that acts in the best interests of the client and is completely independent of financial industry interference.
"[Financial counsellors] are employed by non-profit community organizations and their services are free," said Guthrie. "They are often seeing clients who are stressed or vulnerable and they provide information, support, and advocacy to help these consumers deal with not just their immediate financial situation but also the risk of future financial difficulty."
However, according to Guthrie, some companies have imitated financial counselling organisations. "Profit-seeking operators have been able to attract consumers into expensive and unnecessary financial arrangements by purporting to offer financial counselling services," says Guthrie.
Financial counsellors are available to people from all income brackets with all sorts of financial troubles. Credit card debt is arguably the most ubiquitous type of debt in Australia, with a new national high of $50 billion earlier this year, according to the Reserve Bank of Australia.
Divorce, redundancy, workplace injury, mortgage repayments and escalating school fees are other common problems shouldered by so many from all walks of life. To help consumers come to grips with these stresses, financial counselors offer:
- A complete overview of their financial situation.
- A clear explanation of the advantages and disadvantages relating to their debts.
- A patient and understanding ear.
For anyone worried or embarrassed about seeking financial help, the advice financial counsellors give is both non-judgmental and completely confidential. They may also advocate or negotiate with creditors, government bodies and other financial institutions with whom the consumer is indebted.
"For example, a financial counselor might attempt to negotiate a debt waiver, or may even challenge the legality of a debt (they often work closely with consumer credit lawyers) on the basis it is not owed, the amount is incorrect, etc." says Guthrie. "They will provide advice also about bankruptcy, about debtor's rights and responsibilities."
The new bill reinforces a fundamental tenet of the profession peculiar to Australia: that it remains completely impartial from the influence of the finance sector -- unlike a host of other countries where debt counsellors masquerading as impartial financial counsellors are often funded by credit advisors. In this case, they have an obvious incentive to suggest a repayment arrangement even when it's not in the consumer's best interests.
There are about 900 financial counsellors currently active in Australia in every state and territory and maintained by strict accreditation standards. Financial Counselling Australia -- the national peak body for the sector -- has a "find a financial counsellor" map on its website.
Under the new laws -- which go into effect March 1, 2013 -- thousands of Australians who have to face the daily grind of trying to scale seemingly insurmountable debts are guaranteed advice that is free, completely impartial and always to their best interest.
"Profit-seeking operators have been able to attract consumers into expensive and unnecessary financial arrangements by purporting to offer financial counselling services," said Guthrie. "Section 160C will put a stop to this with one fell swoop."
See related: Got bad credit? 4 ways to boost your score; 5 ways to cure your debt stress