Financial Counsellors

Australian Governments allocated $43.38 million annually (circa 2010) to 44 Australian charities to provide financial counselling to Australians that are experiencing Extreme Financial And Emotional Distress or Financial Counsellors or Financial Counselling or means the SMH article Middle class hit by debt notes, inter alia, that:

Credit Card Distress

"Financial counsellors often report there is a wide interpretation of the responsible lending provisions in the Act, and it is not unusual for a client to have credit cards whose aggregate limits exceed their yearly income."

Credit card debt is a leading reason why people seek financial counselling services, according to principal solicitor with the Financial Rights Legal Centre, Alexandra Kelly.

"Typically, they may start with one card and when they reach the limit on that card, they get a second card and a third card and so on," she said. "They end up just shuffling the debts around while the interest compounds, leaving them in unmanageable debt."

SMH Middle class hit by debt - Huge mortgage repayments and credit cards bills are taking their toll snapshots the problem that non-conflicted ‘Not-For-Profits’ (Salvation Army's Moneycare service Centacare, Anglicare, Lifeline, Wesley Mission's Credit Line, Smith Family, St Vincent de Paul's Budget and Financial Counselling Service, Centacare ‘et al’) deal with the damage when families become hopelessly credit cards indebted.

The biggest debt Alexandra Kelly has seen on a single card is $90,000, while clients with multiple cards can end up owing hundreds of thousands of dollars.

"We have had cases of people who have accrued debts of $100,000 or $200,000 on multiple cards - that is the worst case scenario," she said.

"Around half the people that contact us actually have credit card debt of over $10,000," said the Victoria's Consumer Action Law centre's Chief Executive, Gerard Brody. "Many have many thousands more than that in credit card debt and, in fact, we've worked out that at least one person a week that contacts our centre has credit card debt of more than $100,000."

The Wesley Report: Facing Financial Stress describes a quarter of households in financial stress are middle income earners, who make $52,000-$104,000 a year.

"Recognition of the value of the Australian service model is becoming a feature of reports that cross-over the space in which financial counsellors operate. For example, the November 2005 ANZ publication “Understanding Personal Debt and Financial Difficulty in Australia” reported on a qualitative survey of consumers who had self-identified as being in financial hardship. The resulting report noted":

For people who saw a financial counsellor, it was unanimously a positive empowering experience for them, albeit at a negative point in their life. In addition, the majority stated it had changed the way they viewed their finances and changed their financial behaviours.7

"Financial counsellors assist people in financial difficulty, providing information, support and advocacy," said Ms Guthrie. "Our clients will not be able to afford the high fees charged by credit reporting agencies. For example, Veda charges $79.95, while Dun & Bradstreet charge $30.00 to access a credit report within one working day."

Submission to the Treasury Consultation on Improving Consumer Outcomes in Credit Card Usage - FCA "Customers in financial difficulty reported considerable stress and anxiety;"

How to overcome financial stress