Following on from the release of the final report from the banking royal commission, and the official government response, Treasurer Josh Frydenberg and Minister for Families and Social Services Paul Fletcher have announced an immediate review into financial counselling.
The two ministers noted that the final report reads: “The desirability of predictable and stable funding for the legal assistance sector and financial counselling services is clear, and how this may best be delivered is worthy of careful consideration.”
In a joint release, the government officials added: “While Commissioner Hayne made no recommendation in regards to a review of financial counselling, the government recognises that it is a vital service used by thousands of Australians every year.
“For this reason, we are commencing an immediate review that will focus on the coordination and funding of financial counselling services. It will consider gaps and overlaps in current services and the adequacy of appropriate delivery models for future funding.”
While the Department of Social Services provides funding for financial counselling services around the country (with a commitment that totals $64.2 million over 4.5 years), the two ministers said that these services “face a number of challenges, including inconsistent and short-term grant-based funding streams, fragmented delivery across jurisdictions and high demand”.
“This review is a chance to increase predictability and stability in funding for financial counselling, as well as consider whether funding sources can be broadened,” the ministers said.
“States and territories, private and not-for-profit funders, the financial services sector and those involved in service delivery will be consulted.”
Financial Counselling Australia CEO Fiona Guthrie said: “FCA and financial counsellors are delighted that the government recognises the immediate need for predictable and stable funding of financial counselling.
“We welcome the review into the capacity of existing services to meet growing demand, as well as the adequacy and source of future funding.
“We look forward to working with the government on this review.”
According to the Treasurer and Minister Fletcher, the review is also set to benefit drought-affected communities, with senior representatives from the Rural Financial Counselling Service (RFCS) having recently attended a Drought Finance Taskforce meeting and shared observations about client experiences as well as the RFCS’ relationships with banks.
The review will be led by the Department of Families and Social Services in consultation with Treasury and the Department of the Prime Minister and Cabinet.
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.