As Victorians we stand together fighting the scourge of COVID-19. We do this in simple ways: washing our hands, wearing a mask, maintaining 1.5m social distance. We also do this as an industry through our work, providing support for those who have lost their jobs, businesses, and their financial security.

For many agencies, referrals to financial counselling services have temporarily slowed and this has helped get waitlists under control. Overworked financial counsellors are finally getting a moment to catch their breath, but are not afforded the privilege of being able to relax as the spectre of the future looms over us.

Both tiers of government have brought us into the tent to help deal with the fallout from the virus. The Federal Government has provided additional funding to agencies to expand the sector for the projected surge in demand.

The State Government is providing extra funding to FCVic to work on key projects, and FCVic has been busy planning these new projects in the mental health, utilities and tenancy spaces.

FCVic has also been recruiting to help with workforce development and training, as well as feeding into various other projects and campaigns, such as the Raise the Rate campaign.

Work is being done to prepare a one-day industry summit for next year, as well as an electronic AGM as an alternative to the one normally held alongside the conference. Luckily, our new constitution when revamped last year included provisions for electronic, remote participation.

In dark times we have to remember what we are grateful for. I am grateful I am a financial counsellor. Whilst many other sectors are doing it tough right now, our sector looks like it will come out the other side of this crisis stronger and with a larger membership.

I am also happy that people on Jobseeker are finally getting enough money to live on. Hopefully, the government sees the light and raises the rate permanently, instead of leaving people to languish in abject poverty. With so many people stuck on Centrelink, the pressure to raise the rate can only help the cause.

With the change of season upon us we also have a change in our lockdown restrictions. The winter chill is here but hopefully this will be offset with an increased warmth in our hearts brought about by interactions with friends and families now possible with the easing of restrictions.

In the words of Nobel Laureate Bob Dylan, the times they are a-changin’. With change comes hope. Hope that things will be better somehow. That Jobseeker will get fixed. That we as a nation will restructure our economy to be greener, and kinder to the less privileged – our clients amongst them.

These changes may or may not come about in our country, but at the very least, it looks like financial counselling will continue to extend its reach and grow as a sector. This means a bigger voice and greater impact.

Whilst there has been a dip in referrals for a lot of agencies, the feeling out there is that what we are experiencing is comparable to a tsunami. Currently the water has receded, and we are bracing for when it surges back in. All indications are that economically the hard times are ahead, especially when people exhaust their hardship with the banks, and JobSeeker and JobKeeper are rolled back. So it’s time to batten down the hatches and prepare ourselves for what is coming.

If we can be grateful for something it is that we have time to prepare for what is coming. We can also feel grateful that both State and Federal Governments are looking to our sector to be part of the solution.

FCVic is receiving funding in a package developed by the Department of Health & Human Services, as part of the State Government’s response to COVID-19, to help flatten the mental health decline curve. It is well established that there is a comorbidity between financial hardship and poor mental health outcomes. This opportunity reflects increasing recognition of financial counselling as an essential social support service and an opportunity to not only lift mental health skills and knowledge of financial counsellors, but to include financial counselling as part of mental health services as we advocated in our submission to the Victorian Government’s Royal Commission into Mental Health. On top of this financial counselling was recognized in an energy support package developed by the Department of Environment, Land, Water and Planning. This includes funding for additional financial counsellors, and for FCVic to coordinate and advocate on energy issues. There is hope that we will secure further funding to assist with other pressure points for our clients in the coming weeks.

FCVic and its Board are mindful that now, in the lull, it is time to get our house in order and as such Sandy has written to the heads of the financial counselling agencies in Victoria, following up on the Counting the Costs report and seeking their assistance in making sure things are sustainable and workloads are safe for when the waters come rushing back in.

When the waters come back in and people are thrown in the deep end, we will need to line up all the supports we can to help people in hardship stay afloat.

Financial counsellors working with survivors of family violence know that there are multiple ways in which perpetrators can use debt to exercise power and control over an intimate partner even after a violent relationship breaks down.

Coercing, deceiving or pressuring an intimate partner to take on debt, either solely in her own name, or in joint names, is a recognised form of economic abuse. Economic abuse is a common form of family violence, with 15.7% of Australian women and 7.1% of men experiencing it in their lifetimes.

Researchers at Melbourne Law School have published an article drawing on the views of financial counsellors, consumer solicitors and other advocates on their experiences of assisting women with debt problems resulting from economic abuse.

The article is the result of a study involving focus groups with consumer advocates employed by Victorian community organisations including Consumer Action Law Centre, Good Shepherd Australia New Zealand and WIRE Women’s Information. All of these organisations have been involved in the Economic Abuse Reference Group, which seeks to ‘[influence] government and industry responses to the financial impacts of family violence’.

This study was carried out by Evgenia Bourova (Research Fellow), Professor Ian Ramsay and Associate Professor Paul Ali as part of their work on the Financial Hardship Project. This is a research project funded by a Discovery grant from the Australian Research Council.

According to consumer advocates taking part in the study, economic abuse can have devastating consequences for the long-term financial security of survivors of family violence. Women fleeing violent relationships frequently forego essentials such as food and heating in order to pay both their own and their former partner’s share of joint debts, and thus avoid having a default listing on their credit history.

Legal protections are in place to allow Australians in financial hardship to negotiate payment plans and other arrangements with banks, utility companies and other creditors. In theory, these protections can provide women with debt incurred in the context of economic abuse with a temporary reprieve from debt recovery. 

However, as the study shows, family violence workers and other advocates require greater support in navigating a complex intersection of family law and consumer credit law to ensure that their clients can exercise their rights under these legal hardship protections.

The short-term solutions available through hardship programs are also of little use to many survivors of family violence, as they can only provide a temporary reprieve from repayments even in cases where the debt itself was taken out in circumstances involving pressure, deception or duress.

The research team is grateful to all of the financial counsellors who took part in this study. For more information on any aspect of the study, please contact Evgenia Bourova.

My research study

As mentioned in the June 2019 edition of the Devil’s Advocate, for my PhD study at Melbourne Law School, I am researching the impact on debtors of the different options available for consumers who are over-indebted. I’m focusing on bankruptcy, debt agreements and financial difficulty assistance.

Although many people use one of these options each year, we still do not have much information about what happens next, and whether the different options are effective in, for example, providing debtors with a fresh start, or reducing the chance of future debt problems. My study is exploring some of these issues, and in the first stage of data collection, I invited debtors to share their experience through an online survey. Some initial thoughts on the results are set out below.

I am now starting a new phase of the data collection, and inviting financial counsellors, insolvency practitioners, and other professionals in the sector to share their views of the different options, also through an online survey. The greater the response to the surveys, the more I can be confident that the range of views are represented.

Insights from financial counsellors, insolvency practitioners and others

If you work as a financial counsellor, consumer lawyer, or insolvency practitioner, or have another professional role in the consumer debt / personal insolvency sector, I’m keen to hear your thoughts about the different options and their impacts. Please consider completing a short, anonymous survey, available here:

https://melbourneuni.au1.qualtrics.com/jfe/form/SV_6RRwGzecQs8dxQx

Finding out about debtors’ experiences

I have been collecting survey and interview data from debtors for some months. Although I am still collecting this data, I have started to review the results to date. Some initial thoughts are:

• There has been a very low response rate to promotion for the debtor surveys, confirming that it is difficult to recruit people for these sorts of studies. Some of the factors that may account for the low response rate include that many people may experience ‘survey fatigue’, given the extensive use of surveys in marketing, customer service, politics and research; specific limitations in this study (for example, using online surveys only, the length of the survey), and/or a reluctance amongst potential participants to revisit issues around debt. A few years ago, researchers in Canada highlighted some of the difficulties associated with empirical research on consumer debt and insolvency (see Sarra and Sarra 2009, http://dx.doi.org/10.2139/ssrn.1399627), and I think that many of the difficulties that these authors identified are also present in Australia.
• One of the aims of my study is to explore the impacts of the different options through the lens of financial wellbeing, using the definition “when a person is able to meet expenses and has some money left over, is in control of their finances and feels financially secure, now and in the future” (Muir et al 2017, see https://www.csi.edu.au/media/Exploring_Financial_Wellbeing_in_the_Australian_Context_Final_Report.pdf). An initial review of the data shows that this might be a useful approach: many of the survey responses showed that participants had a higher level of financial wellbeing at the time of the survey, compared to the time immediately before entering bankruptcy or receiving financial difficulty assistance.
• An initial review of the data also points to the emotional relief that the different options provide. For example, one interview participant referred to feeling that ‘a thousand-kilo weight’ had been lifted off them when their bankruptcy was confirmed. Also, in the surveys, the number of participants reporting that they were ‘constantly worried’ about their finances at the time of the survey was smaller than the number of participants who reported that they were ‘constantly worried’ immediately before their bankruptcy. A similar shift was also reported from participants who received financial difficulty assistance. However, it must be kept in mind that the survey samples were small, and not statistically representative of the relevant population.

I’m still seeking participants for the debtor surveys (open until 20 December), so please get in touch with me if you can help promote the debtor surveys by:

• Letting relevant clients or former clients know about the opportunity to participate in a debtor survey;
• Sharing information about the study through social media (eg, Facebook, Twitter).

I can provide some suggested text for an email to clients or a social media post, and my contact details are below. My thanks to those who have already helped to promote the debtor surveys to potential participants.

Privacy and ethics

As I previously identified, the privacy and confidentiality of participants in the study will be protected, and the study design has been approved by Melbourne University’s Human Research Ethics Committee (Ethics ID 1851074; contact humanethics-complaints@unimelb.edu.au). 

More information

My study will continue into next year, and you can read more about my study here: https://law.unimelb.edu.au/students/grd/students/nicola-howell, and more about my other research and my professional background here: https://staff.qut.edu.au/staff/nicola.howell. There is also a separate study website that includes the links to all of the debtor and practitioner surveys: https://debtstudy.wordpress.com/.

Once I have finished collecting and analysing the data, I will share some of the findings through future editions of the Devil’s Advocate.

Thanks for your support, and please contact me if you have any questions or would like to help promote the study!

Nicola Howell
PhD researcher, Melbourne Law School
Senior Lecturer, Faculty of Law, Queensland University of Technology
Email: nhowell@student.unimelb.edu.au or nicola.howell@qut.edu.au
Tel: (07) 3138 2006