Banks back funding financial counselling

The Australian Banking Association (ABA) has welcomed the release of a review into Australia’s financial counselling sector, which, among other recommendations, has proposed the four major banks provide half the initial funding required to enable the ramp up of financial counselling services.

In the final report of the banking and financial services royal commission, Commissioner Kenneth Hayne said financial counselling services were a necessity to the community, adding “the desirability of predictable stable funding… is worthy of consideration”.

Following the release of the final report, the federal government undertook a review of the Coordination and Funding for Financial Counselling Services across Australia, led by University of Sydney adjunct professor Louise Sylvan, in consultation with the treasury and the Department of the Prime Minister and Cabinet.

The Sylvan Review, released last week, stated increasing access to services to meet the current unmet needs identified by financial counsellors will cost around $45 million per annum. This is in addition to current government funding of around $45 million.

Immediate implementation and access to financial counselling would cost $40 million. The review recommended half of this contribution should initially come from the big four banks, with the establishment cost to be met by government.

The ABA said banks actively participated in the review, with the report reinforcing a number of issues identified by the banks in their submissions.

These include better coordination of resources across the sector, a central body to allocate funding and long-term funding certainty for financial counselling, including a long-term, data-driven funding model.

ABA chief executive Anna Bligh said as highlighted in their submission to this review banks support industry funding sourced from both the financial sector and other industries “that may contribute to financial hardship”.

“Certainty of funding for financial counsellors is a top priority and the industry will work with the government to finalise a model as quickly as possible to appropriately fund the sector,” Ms Bligh said.

The banking industry viewed financial counsellors as “valuable partners” in assisting vulnerable customers, she added.

“Financial counsellors get people back on track when they’re experiencing some of the most difficult moments in their lives and provide a valuable education service to people with lower levels of financial literacy and capability,” Ms Bligh said.  

The review outlines the importance of financial counsellors in helping those struggling to repay their debts, manage their household budgets and provide for families facing financial hardship.

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.