Financial Rights Legal Centre
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Call the National Debt Helpline
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Financial Rights E-flyer: March 2020

Welcome to the Financial Rights Legal Centre E-flyer.

In this edition:

  1. Advice and assistance in the time of COVID-19
  2. First came the fires, then the floods. And the battle with the insurer.
  3. Commissioner Hayne’s funding suggestion that fell through the cracks.
  4. COVID-19 and travel insurance. Buyers beware!
  5. Mob Strong Debt Helpline
  6. Trent Zimmerman MP

Advice and assistance in the time of COVID-19

We recognise this is an extremely distressing and difficult time, and we know that COVID-19 is already affecting people experiencing vulnerability. Be assured that we are doing everything we can to continue providing free and independent advice and assistance to people in financial stress.

As a result of COVID-19 there is increasing demand for our services, and we are taking many measures to ensure continuity of services.  However there may be factors outside our control that impact on our ability to answer our hotlines or respond to email enquiries – for instance, outages in phone or internet provision, or staff absences due to sickness or self-isolation.  If this should occur, we will endeavor to get services running as soon as we can, however for urgent matters you should try seeking assistance from other services such as the Australian Financial Complaints Authority (AFCA). They have established a significant event support hotline for those impacted by the COVID-19 pandemic: 1800 337 444.

Responses to the COVID-19 pandemic are continually evolving for now, and we will continue to monitor and adapt our services in response, based on the latest Government health advice.

Please be assured that our priority remains to continue providing advice and assistance to the community, whilst doing all we can to protect the safety of our staff.

2. First came the fires, then the floods. And the battle with the insurer

The bushfires were still burning around the country when we began to hear from people on our Insurance Law Service and the National Debt Helpline who were urgently in need of legal assistance and financial counselling.

For two of our clients, Else and Andrew, their community was ravaged by bushfires, leaving them with no internet or landline in their home. They had limited emails and phone service on their mobile on some parts of their property, and they were unable to leave their property. Andrew managed to save their home, but fences, tanks and roofing were all badly damaged, as were the timber logs supporting the bridge they depended on to cross Caparra Creek and get on and off their property. Then in February, the rain came, flooding the creek and completely washing away the bridge, or culvert, that had caught fire months earlier.

After this second disaster, the only way the couple could leave their property was by walking across a three-metre plank, or using a tractor to tow their car through the flooded creek.

Else and Andrew lodged a claim with their insurer. At first, the insurer was helpful and indicated they would cover for repairs to their house, water tanks, and fences, but they would not pay the $70,000 to rebuild the culverts that provided the only access on and off the property.

We provided Else and Andrew with specialist insurance legal advice that the culverts should be covered as part of the ‘home’ in their insurance policy. We assisted by helping Else draft complaint letters and their insurer eventually agreed to cover the full cost of repairing the culverts. The clients were very pleased with the outcome.  

You can read more about Else & Andrew in this ABC story: https://mobile.abc.net.au/news/2020-02-29/insurance-law-service-loses-funding-takes-on-fewer-disputes/11985376?pfmredir=sm

3. Commissioner Hayne’s funding suggestion that fell through the cracks

Over a year ago the Government committed to implementing Commissioner Hayne’s 76 recommendations in his Final Report of the Banking Royal Commission. Since then Treasury has been full speed ahead in drafting legislative changes to fulfil the Government’s commitment. But one important suggestion from Commissioner Hayne has fallen through the cracks: funding for the legal assistance sector.

While not included in the official list of 76 recommendations, on p489 of the Final Report of the Banking Royal Commission, Commissioner Hayne noted that:

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 their February 2019 response to the Banking Royal Commission (p39), the Government:

agree[d] with the suggestion by Commissioner Hayne that there is a need for predictable and stable funding for the legal assistance sector and for counselling services

The Department of Social Services then conducted a review of funding for financial counselling services across Australia (the Sylvan Review). In October 2019, the Sylvan Review recommended doubling the number of financial counsellors in Australia using an industry levy.  It also recommended the government consider the impact on the provision of legal assistance that will flow from significantly increased provision of financial counselling.

So where is the funding plan for legal assistance for consumers dealing with financial stress? There are specialist free legal services all over Australia that have been dealing with the consumer fallout from the misconduct of financial service providers, but there is no plan at the moment to provide those services with predictable and stable funding, as recommended by  Commissioner Hayne.

Specifically for the Financial Rights Legal Centre, we are facing a major funding challenge in the next 12 months. Both of our national services, our Insurance Law Service and our Mob Strong Debt Help service do not have sustainable funding after 2020.

 Although Australia is coming out of the Black Summer of bushfires we are now all overwhelmed with concerns about COVID19. We also know from experience that consumers will continue to need legal assistance and support regarding natural disaster insurance disputes for a long time to come. Financial hardship as both a direct and indirect result of the fires will also continue for some time. As other emergency services and recovery centres close down, our telephone-based advice services will remain available to consumers Australia-wide. After seven official insurance catastrophes in five months we had to introduce systems to prioritise disaster calls because we are already struggling to keep up with business as usual demand for insurance advice. Since the summer began, we have provided over 250 services to consumers dealing with all kinds of natural disaster-related insurance disputes and financial hardship including bushfires, hail, flood, storms and now the COVID19 pandemic. We are already seeing a new surge of calls relating to insurance and COVID19.

Unfortunately at the same time that our services are urgently in need, our funding is running out.  Within a few months we will start losing our solicitors. By June next year we will be operating at one third of our current capacity, with the Insurance Law Service being cut in half and Mob Strong without any funding at all. The Government needs to make a plan for stable and predictable funding for the financial services legal assistance sector in addition to financial counselling, or consumers will be left to fend for themselves.

4. Cancelled a trip because of COVID19? Read your travel insurance documents carefully.

*DISCLAIMER: things are changing rapidly and we can only ensure that this article is accurate as of 27 March 2020. If you have any questions about your specific travel insurance please call our Insurance Law Service on 1300 663 464

The COVID-19 outbreak has destroyed travel plans everywhere, grounded most flights and resulted in government-mandated restrictions on movement. Many countries have banned arrivals from non-residents, forcing policyholders to abandon business and holiday plans. One question you might have is whether travel insurance will cover you if you have had to cancel because of COVID-19.

The short answer is: it depend!

If you bought your insurance after COVID-19 became a “known event”, there is a good chance you will NOT be covered (unless you have purchased special and pricey “cancel-for-any-reason” cover).

Even if you bought your insurance before COVID-19 became a “known event”:

  • Some policies exclude ALL claims arising from a pandemic or epidemic
    • Only some policies cover medical expenses and/or cancellation costs in a pandemic or epidemic.

Most travel insurance policies have exclusions for “known events” – claims directly or indirectly arising from circumstances a reasonable person would have known about or foreseen. So when did COVID-19 become a known event? This varies slightly from insurer to insurer, depending on the precise wording of their policies. The date information became available on official government websites such as smartraveller.gov.au and in the media will be relevant. According to the Insurance Council of Australia, COVID-19 became a known event for most travel insurers between 20-31 January 2020.

That means any travel insurance purchased after those dates is unlikely to cover any expenses related to COVID-19. But insurers have to assess claims on a case-by-case basis, so still check with your insurer if you think you have a claim. If your claim is knocked back, you should ask for the reasons, review your policy and seek advice.

If you purchased travel insurance before COVID-19 became a known event, you may still not be covered for COVID-19 related expenses if your claim falls within a pandemic/epidemic exclusion in your policy.

You will need to check:

  • Whether your policy has an exclusion relating to pandemics and epidemics (or viral outbreaks etc)? and
  • if all claims are excluded, or only certain claims (for example, the exclusion might prevent you claiming cancellation expenses, but still enable you to claim medical expenses).

For claims arising prior to the World Health Organisation declaring COVID-19 a pandemic on 11 March 2020, there may be some scope to argue some pandemic exclusion clauses do not apply, depending on the circumstances, such as where you are/were planning to travel. Again, if your claim is knocked back, you should ask for reasons, review your policy and seek advice.

All of that being said, Australia’s $1.2 billion travel insurance industry is under pressure to refund premiums paid for cover that will go unused as a result of the shutdown on travel. On 26 March IAG (which includes NRMA, CGY, WFI, SGIO and SGIC) announced they would provide “travel insurance refunds for any unused proportion of premiums, including full refunds where customers have not yet travelled and have not claimed under their policy, with no administration or cancellation fees.” Although no other major insurer has publicly committed to refunds, such a move will support customers and likely earn loyalty in the future. Some policy wordings may also allow for some partial refund of the premium, so it never hurts to ask.

5. Mob Strong Debt Help

Mob Strong Debt Help (1800 808 488) is the Financial Rights Legal Centre’s dedicated phone line for Aboriginal and Torres Strait Islander peoples across Australia experiencing financial hardship or having problems with consumer financial products. Our Aboriginal Services Coordinator Amanda Cameron and Aboriginal solicitor Mark Holden have been very busy building connections.

Over the past few months we have been getting the word out to the community to raise awareness about our service, educating mob about some of the things we are seeing and learning about what is going on in the community. Most recently, Amanda and Mark travelled to Brisbane to visit communities in Logan, Inala and Toowoomba. We were also invited by the NRL to promote our service at the Indigenous All Stars game on the Gold Coast and we had a deadly time (Thanks so much NRL!).

Some of the issues we are seeing out in the community have been:

  • reliance on payday loans to meet living expenses and getting into debt traps, especially after Christmas
  • not being able to meet the payments on dodgy consumer leases for household products such as TVs, washing machines, air conditioning units and video games
  • paying for funerals and sorry business – funeral insurance is used a lot in the community but many people cannot afford the stepped premiums and are set up to fail, and
  • domestic violence and financial abuse – this happens not just between partners, but can happen in kinship groups as well.

Mob Strong Debt Help is here to help and provide free legal assistance over the phone or by email. Get in touch if you need to! Include link to Mob Strong phone number etc.?

6. Day in the Life – Trent Zimmerman MP for North Sydney joins us to hear about the issues that clients call about.

We love having visitors, and many politicians and decision-makers join us to learn first-hand about the issues our clients are calling us for advice and assistance about.

We know what a positive impact financial counselling can have on the lives of people experiencing financial stress, but it’s not always easy to understand exactly what financial counsellors do. The unique Day in the Life project invites participants to sit alongside and listen in while one of our trained financial counsellors takes calls on the National Debt Helpline.

Federal MP for North Sydney Trent Zimmerman joined us recently and listened in as Miriam, one of our financial counsellors, took some calls. Trent was very interested and had lots of questions about our work, and appreciated hearing what some of our clients had to say when they called in.

Of course all of our visitors sign a confidentially agreement, and our financial counsellors always check with callers that they consent to our guests listening in.

If you, or someone you know, would like to participate in the Day in the Life project with us at Financial Rights Legal Centre, get in touch by emailing projects@financialcounsellingaustralia.org.au