"Financial counsellors play a vital role in supporting individuals facing financial hardship, and a sustainable funding model is essential for the continuity of their important services," stated Andrew Hall, CEO of the ICA.
The insurance industry has been actively engaged in discussions with the Federal Government and other financial services sectors in developing an industry co-funding model since 2020, demonstrating its commitment to supporting financial counselling.
Addressing Recommendations and Rising Demand
The establishment of the funding model is in response to recommendations made by Louise Sylvan, former deputy chair of the Australian Competition and Consumer Commission, in her review of financial counselling after the Hayne royal commission recognized the significance of these services. Sylvan’s recommendations included the collection of additional funding from the financial services sector to meet the expected surge in demand for financial counselling.
Minister for Social Services, Amanda Rishworth, highlighted the collaboration between the Government and representatives from various industries in establishing the new model.
"This voluntary industry funding model aims to enhance access to financial counselling services and distribute the responsibility among contributing sectors," Rishworth explained. "It has been designed to receive funding contributions from industries that create demand for financial counselling and benefit from these services."
The implementation of this funding model could potentially enable more than 25,000 individuals to access services like face-to-face appointments with financial counsellors or the National Debt Helpline by providing an additional $10 million per year in industry funding.
Industry and Government Support
Incremental to the Commonwealth's annual allocation of nearly $50 million to support financial counselling services, the financial services sector has committed $30 million towards this funding model.
To facilitate the industry funding model, the Government plans to invest $1.5 million in establishing a new not-for-profit independent body responsible for the collection and distribution of industry funding. This independent organization will also have decision-making power regarding funding allocations and priorities and is expected to be established by early next year.
