Welcome to the Financial Rights Legal Centre E-flyer.
In this edition:
- What we do at the Financial Rights Legal Centre: Energy Referral Support
- Big changes in External Dispute Resolution
- Using our Sample Letters on your Phone
- New Factsheets on Tolling and Insurance Excess
- Financial Rights’ viewpoint
- Financial Rights in the media
Every E-flyer we like to give our colleagues and readers an insight into what we do and how we work at the centre. In previous editions we have explained the limitations of what we can do, what we do about credit repair companies and notices to vacate. This month we take a look at how our financial counsellors can assist people with energy debts.
Energy retailers often refer people to the National Debt Helpline (NDH) number 1800 007 007 for support with energy accounts.
There are a number of reasons why an Energy Retailer might refer a client to NDH:
- the accounts may be in arrears;
- the person indicated that he or she may not be able to meet upcoming payments;
- the person keeps on breaking their repayment arrangements with their Energy Provider;
- the person has been unsuccessful in securing another repayment arrangement; or
- the repayment plan suggested by the Energy Provider is unaffordable and unrealistic.
Disappointingly, it seems that not much information is given by the energy provider as to what assistance Financial Rights can provide. This can be complicated by the fact the NDH is national, and there are variations across the services.
Sometimes a person has an expectation that we will be able to do any number of the following things (some of which we can, some of which we can):
- pay the bill for the person – No!
- stop disconnection of the service – No but we can help them prevent it!
- provide Energy Accounts Payment Assistance (EAPA) vouchers – No, but we can give numbers for providers who do in the client’s local area.
- provide the caller with $500 or more from various state run support services – No, but we do give numbers of where you might find this support.
- reconnect a disconnected service – No, but we can give information and assistance about how this could be achieved.
- force the energy provider to accept an amount that does not cover the energy usage – We can discuss options and strategies in getting re-payment arrangements and referrals to financial counsellors.
- stop debt collection activity on the old account where the client has switched from one energy provider to another provider – We can provide information and options.
- do a budget for the client over the phone or give a reference number to confirm they had spoken with us, which would satisfy the Energy Provider requirements to restore the client back on his/her previous repayment plans – We do in some limited circumstances but we refer people to see free financial counsellors in their local area
What we do for people with energy issues
The following list will help explain our approach to people calling the NDH with energy issues after being referred by an energy provider:
We discuss with the caller their current situation, what makes up the outstanding balance, and how this debt was incurred. There could be a range of issues including medical, domestic violence, unemployment, or relationship issues. We advise the caller that if the energy retailer is unaware of these circumstances the caller should inform them as assistance may be granted.
We enquire about other billing issues. Are there any billing issues that need to be disputed? Is the caller on a hardship arrangement, and if not, we refer them to the Customer Hardship Support Services to make sure their provider knows.
We discuss with the caller their whole financial situation, as most callers have multiple debt issues. We then make referrals to the appropriate provider such as a local face to face financial counsellor or to the hardship department of other financial service providers. It may be that if the caller is assisted in these other areas, they can increase their available income to meet their ongoing energy costs thereby avoiding disconnection or falling further behind.
A free financial counsellor can assist with a budget but this is best done in a face to face meeting. The financial counsellor will be able to:
- address any money management issues;
- make sure the client is receiving all eligible energy rebates;
- advocate on incentive payments with a view to clearing arrears as well as ensuring the caller covers ongoing usage, especially for people on very limited income;
- seek waivers in limited circumstances.
We encourage callers to make repayments if they can afford to do so, while:
- negotiating with the energy provider;
- waiting for appointments for an Energy Accounts Payment Assistance (EAPA) provider or
- seeing a Financial Counsellor to make sure the debt does not get out of hand.
We discuss whether there is a risk of disconnection and the urgency of the matter. If disconnection is at risk we explain:
- the role of the Electricity and Water Ombudsman NSW (EWON) who may be able to stop the disconnection of a service;
- if the client has an appointment to obtain Energy Accounts Payment Assistance (EAPA) vouchers the provider cannot disconnect the service. Whilst we don’t provide EAPA vouchers we do provide details to callers on where a person may access them and the grounds upon which they may qualify for them; and
- Customer Hardship Support Services
We discuss the risk of switching. We explain that if a caller switches providers then any payment plan in place is usually cancelled and the full amount becomes immediately payable. If someone is contemplating switching we advise them to not switch unless they are genuinely moving to a better situation and they understand all of the terms and conditions of their new Energy Provider contract. If they are unlikely to be able to pay their energy bill in full by the due date, switching to a new provider offering the best discount will not resolve it. These discounts are subject to very strict conditions. For example, to qualify for the maximum discounts, you not only have to pay the whole bill in full by the due date but also agree to make your payments by direct debit. If one or more conditions are not met, the caller might raise extra penalties/fees and charges from the Energy Provider but also from his/her own financial institution if said the direct debit is dishonoured.
We try to provide clients with all the information they need, and all the options that are available to them so that they are aware of:
- their rights;
- the energy providers rights;
- what realistic repayment arrangements are available in their circumstance; and
- what other realistic options are available to them.
In the Federal Budget the Government has recently announced the creation of a new ‘one-stop shop’ financial complaints authority. The Government says this will help Australians get free, fair and fast dispute resolution against financial institutions. Consumer advocates (including Financial Rights) have publicly supported the announcement agreeing this is a sensible move that can help Australians get access to justice.
The new complaints service will consolidate the Financial Ombudsman Service (FOS), the Credit & Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal into a single industry ombudsman scheme. This big change will reduce the confusion and inconsistent outcomes currently caused by gaps and overlaps between the three schemes.
The new authority will award compensation of up to $500,000 for consumer disputes, $1 million for small business disputes, and have unlimited jurisdiction for disputes relating to guarantees and superannuation. The Australian Securities and Investments Commission (ASIC) will also be given a greater role to monitor how firms deal with complaints internally.
There are still big questions about how the new scheme will function, where it will be located, and even what it will be called. How will the transitions work with complaints still being resolved in the current schemes? What we know now is that the new scheme is set to begin taking complaints from July 2018.
The Government is currently consulting on the draft legislation which will make this new scheme a reality. In a joint submission written by the Consumer Action Law Centre, Financial Rights supported several recommendations regarding the new scheme, including:
- The new scheme should take over the assets, processes and staff of FOS and CIO from the date of commencement.
- The legislation should specify that all active FOS and CIO complaints should be taken over by the new body.
- A working group of directors of the existing schemes should be established to consult with stakeholders (including consumer representatives) to develop the terms of reference.
- The important role of consumer advocates in assisting, in particular, vulnerable consumers should be enshrined in the new framework, either in the draft legislation or the terms of reference.
In the mean time Australians should be reassured that current complainants and anyone thinking of bringing a complaint against a financial service provider, that FOS, the CIO and the SCT are all still open for business.
As far as the new name goes, consumer advocates are arguing: The name of the scheme should:
- be a decision left to the board of the new scheme following market research;
- be easily searchable online and not easily confused with other scheme names;
- include the word ‘ombudsman’;
- not include the word ‘authority’.
In March 2017 Financial Rights launched its new Sample Letter Generator. Since then we have been received great feedback from consumers and community workers alike about this online tool and how easy it is to use in disputes with financial service providers.
Some of the best feedback we have received however is how easy the program is to use on your smart phone, making this program a great tool for community workers doing outreach in regional and remote areas. By entering a few contact details, answering a few short questions and choosing from a list of options you can generate a formal letter which can be copied in to an email in minutes.
If you are a community worker doing outreach in regional and remote areas where clients have limited internet access, you can help them apply to a bank for financial hardship, raise a dispute with an insurer or send a settlement offer right from your own smart phone while the client is with you. Make sure you have this tool bookmarked!
Feedback from a Legal Aid lawyer in Queensland:
“I used my phone to access the letter, I filled in the fields and had the letter directly emailed to the client because he did not have all the loan details with instructions on forwarding to the lender. The letter generator is extremely easy to use; this client had a very good hardship proposal and without the assistance would have been incapable of writing the letter himself.”
Financial Rights regularly updates our factsheet library with recent additions including Pet peeves – Pet insurance and you If a tree falls… and I’m finding it hard to manage my finances – should I sign up with a Personal Budgeting Service?
This month we have created two new additions on the issues of tolling debts and insurance excesses.
For a driver living in Sydney’s west, driving into the city is increasingly a very expensive exercise. Not evening counting the petrol costs, one way into the City from, say, Rouse Hill will cost you anywhere north of $15 – and that’s if you’re lucky. With e-tolling the standard now the tolls fluctuate based on time of day and distance travelled. And it’s not just a Sydney phenomena – tollways popping up all across the Eastern States.
No wonder then Financial Rights is experiencing an influx of callers seeking advice on their tolling debts. And given the large number of operators, various dispute mechanisms and multiple charges and notices, it can be confusing terrain to traverse.
To help Financial Rights has developed the new factsheet: Taking their Toll – What do I do about Unpaid Tolls? The factsheet answers the most common questions we receive including: What happens if you don’t pay a toll? What happens to a toll debt if I become bankrupt? How do I make a complaint? And what powers does the Tolling Customer Ombudsman have?
The following scenario is a common one: You’ve renewed your insurance and had a car accident a few months later. It’s 100% clearly not your fault – everyone including the other driver and the police agree. You then make a claim and asked to pay your excess. But it wasn’t my fault you argue! Can they do this?
While the answer to this may be obvious to some, for many others it isn’t and when they discover that yes they do have to pay their excess, people are upset – it just doesn’t seem fair.
But this is – for better or worse – just the way insurance works.
Insurance excess is your contribution to a claim – the general rule being that an excess is always payable when you make a claim, whether you are at fault or not. Sometimes this is not the case but that all depends on your Product Disclosure Statement.
Financial Rights has developed a new brief factsheet What do I have to Pay my Excess? which seeks to demystify the sometimes complicated implications of insurance excesses.
We use our expertise gained from our work with clients to help give voice to clients’ experiences. In doing so we contribute to improving laws and legal processes to prevent many of the same problems from happening to others. Financial Rights is regularly called on by Government and the financial service industry to assist in policy development and regulatory reviews. The following is a selection of our recent input into regulatory reform.
Financial counselling licensing relief
Financial Rights Legal Centre strongly supports ASIC’s proposals to continue the current licensing relief with the proposed new legislative instruments.
Download our submission here.
Changes to External Dispute Resolution
Following the Ramsay Review into the External Dispute Resolution and Complaints Framework, the Government has agreed to all 11 recommendations including the establishment of the Australian Financial Complaints Authority. Financial Rights has joined with other consumer organisations to support the draft Bill to implement the Australian Financial Complaints Authority and recommend a series of amendments.
Download our submission here.
Insurance in Superannuation
The Insurance in Superannuation Working Group was formed in 2016 to assist the development of a Code of Practice applying to superannuation funds – extending the current Life Insurance Code of Practice. Financial Rights has provided input into this first of a series of discussion papers including account balance erosion, claims handling, and communications and engagement.
Addressing non-insurance and underinsurance for emergencies in Victoria
Financial Rights has made a submission to the he Victorian Department of Health and Human Services regarding Addressing non-insurance and underinsurance for emergencies in Victoria. The submission argues the need for increased suitability requirements, standard cover, encouraging mitigation and producing better information for consumers.
Download our submission here.
NSW Emergency Services Levy
While the Emergency Services Levy Monitor’s Issues Paper is largely directed at eliciting information from relevant insurance companies regarding the processes and actions they are taking with respect to the implementation of the Emergency Service Levy, nevertheless Financial Rights has made the following contribution to the inquiry with respect to issues around communications, transparency and disclosure.
Download our submission here.
General Insurance Code of Practice Review
Financial Rights believes that the general insurance industry is at least 20 years behind the banking sector in terms of addressing basic consumer issues be it in claims handling, mis-selling, unfair contract terms, disclosure problems and the creation of problem products and business models. Financial Rights strongly believes that that there needs to be a fundamental shift in the general insurance sector to one based upon the concepts of suitability (the insurance equivalent of responsible lending in the banking and credit sector) and the standard cover model.
Download our submission here.
Design & Distribution Obligations and Product Intervention Power Proposals
Financial Rights joined with other consumer advocates to commend the Treasury Paper’s focus on improving the existing regulatory framework to ensure consumers receive fair treatment from product issuers and distributors. We believe the integrated package of reforms proposed in the Proposals Paper will significantly improve consumer outcomes in the financial system.
We believe the Proposals Paper needs strengthening in two important areas. Firstly, the range of products and services covered by the proposed design and distribution obligation and product intervention power should be extended, particularly in regards to credit. Secondly, the Australian Securities and Investments Commission (ASIC) should be empowered to make a broader range of product interventions, particularly in relation to remuneration.
Financial Rights coordinator Karen Cox, and Principal Solicitors Kat Lane and Alexandra Kelly regularly appear in the media to speak out on a range of systemic issues facing our clients. Below is a selection of recent coverage:
Check us out on the Checkout!
Both Alex Kelly and Kat Lane appeared on The Checkout in the last month. Alex gave advice about how and what to disclose to insurers when applying for a new insurance policy (ie everything!), and Kat warned about predatory payday lenders (complete with bunny suit! #betterbunny)
Check out Alexandra’s If I Could Say One Thing here
Check out Kat taking on the pay day lenders here
Investigations under the microscope
The Code Governance Committee of the General Insurance Code of Practice released its Investigation into Claims and Outsourced Services. The report confirmed many of the findings of Financial Rights’ own research report Guilty Until Proven Innocent including a lack of oversight of outsourced investigators, unpredictable Code compliance and a lack of guidance with respect to interviewing policyholders. Financial Rights have called for the industry to take immediate action to clean up the sector.
Read coverage of the issue in The Age here.
Debt vultures flying high
The number of Australians in financial distress is on the rise and unregulated debt managements continue to pop up to profit and exploit people struggling with their finances. Alexandra Kelly spoke to ABC 7.30 about the issue in April.
Financial Rights’ provides comment on a range of debt, credit and insurance related issues for print, radio, television or the internet. We can provide expert commentary on issues facing consumers of financial services, offer detailed background information and, where possible, supply case studies. For media enquiries email Drew MacRae at email@example.com and remember to follow us on Twitter @Fin_Rights_CLC