Money matters: How a financial counsellor can help you

Struggling to juggle all your bills? Falling behind on your rent or mortgage payments? You may benefit from financial counselling.

We seek advice from the experts for all kinds of things in our lives – from health to education and everything in between, so you shouldn’t be embarrassed about asking for assistance in an area integral to your wellbeing.

Financial counsellors can help you navigate a very stressful time. But who exactly are these professionals? What role do they play in helping you regain control of your financial health? Let's delve deeper into understanding the invaluable support they can provide.

What is a financial counsellor?

A financial counsellor is a professional with the skills and knowledge to assist you in dealing with various financial issues. They provide advice, support and information, helping you understand your situation and available options.

 

 

Generally, whatever financial difficulties you’re going through, you can seek help from a financial counsellor. This includes dealing with debt, facing legal actions related to finances, struggling with your credit score or considering bankruptcy.

What do financial counsellors do?

Besides financial advice, one of the key roles of a financial counsellor is providing education to help you avoid future financial problems. For example, they can help you develop a realistic budget, provide tips for saving and managing money and educate you on using credit wisely.

They can also help you understand the potential financial consequences of different decisions, such as choosing the Buy Now Pay Later (BNPL) scheme over upfront payments, so you can make informed choices that support your economic wellbeing in the long term.

Financial counsellors can also act as a mediator between you and your creditors. With your permission, they can contact creditors to discuss your financial situation. They can negotiate repayment plans, and potentially request changes to your credit contract terms if you cannot meet the original due to hardship.

Lastly, they can help you complain with an external dispute resolution scheme if you believe a creditor or debt collector has treated you unfairly.

How do financial counsellors differ from financial advisors?

While both financial counsellors and financial advisors provide financial advice, their roles are distinct.

Financial advisors typically work with clients with money to invest. They offer advice on growing their wealth, planning for retirement or managing their taxes. They usually charge for their services and often work on a commission basis.

On the other hand, financial counsellors provide free services, often funded by the government or non-profit organisations. They work with individuals in financial distress, offering guidance on managing debt, budgeting, and dealing with financial crises.

What qualifications do financial counsellors need?

In Australia, financial counsellors are required to have a Diploma in Financial Counselling and must abide by Financial Counselling Australia's Code of Ethical Practice. They also participate in ongoing professional development to stay up-to-date with changes in laws and practices related to financial counselling.

How can a financial counsellor assist you?

Financial counsellors can help with various issues, including:

• • Debt management. They can provide guidance on strategies to manage it. They can also help you understand your debt obligations, negotiate with creditors and create a debt management plan.
  • Budgeting. Financial counsellors can help you develop a budget for your income and expenses. They can guide you on tracking your spending, cutting unnecessary costs and efficiently allocating money for different needs.
  • Bankruptcy. If you're considering bankruptcy, a financial counsellor can discuss the potential implications, explore alternatives, and guide you through the process if it's the best option for your situation.

Working with a financial counsellor

The process typically begins with an initial consultation to understand your financial situation. This is followed by a series of sessions where you and the counsellor work together to address your financial concerns and create a plan of action.

 

 

The number of sessions required will depend on the complexity of your financial situation. Some people may only need a single session to get advice on a specific issue, while others might require ongoing support over several weeks or months to address more complicated financial concerns. For instance, if you're struggling with ongoing issues like low income or chronic overspending, your financial counsellor might provide ongoing support as you learn to change your financial behaviours and progress towards your goals.

How long does it take to get a first meeting?

The wait time for a first meeting can vary based on the demand for their services and the counsellor's availability. Some providers say it may take up to four weeks to book your first appointment, but it may be expedited depending on your circumstances. A good rule of thumb is to reach out as soon as you realise you need assistance.

Questions to ask a financial counsellor

Before your first meeting:

• • What should I bring to our first meeting?
  • How many sessions do I need?
  • What kind of follow-up support do you provide?
  • Is everything I share with you confidential?

During your sessions:

• • What are my options for managing my financial situation?
  • Can you help me understand the potential consequences of different courses of action?
  • Can you assist me in creating a realistic budget?
  • What resources or tools can I use to improve my financial literacy?

Financial counsellors need a clear picture of your financial situation to provide the best advice, so you should be prepared to provide detailed information about your income, expenses, assets and debts. Bring documents such as pay slips, bank statements, bills and any correspondence from creditors to your first meeting.

What can I expect from the counselling process?

Your counsellor will help you understand your financial situation, discuss your options, and help you create a practical plan to manage your finances moving forward. They might also refer you to other services, such as debt management, legal or housing if you need additional support.

Remember, the goal of financial counselling is to empower you with the knowledge and skills to regain control of your financial life.

How much do financial counsellors charge?

Financial counsellors provide their services for free because the Australian Government funds them through the Department of Social Services (DSS).

The DSS commits about $44 million annually for these services, with an additional $30 million contributed by state and territory governments.

The government is also investing $10.5 million over four years to support the design and evaluation of an industry funding model, which includes $1.5 million in seed funding for a new independent not-for-profit body to manage industry funding.

Furthermore, it's working with industry representatives to establish a funding model that allows direct industry contributions to enhance support for Australians facing financial difficulties.

Funding can also come from philanthropic organisations and other businesses. For instance, Financial Counselling Australia (FCA), a major provider of these services, receives part of its funding from the Commonwealth Bank.

Who governs financial counsellors?

Financial counsellors operate under a licensing exemption from the Australian Securities and Investments Commission (ASIC), which means they don't need a licence to offer financial counselling. However, they must abide by certain conditions, such as not charging fees to their clients and not receiving any payments or commissions from third parties for their services​​.

If financial counsellors engage in credit activity, such as providing credit contracts and consumer leases, they are required to be ASIC licenced.

FCA is Australia's peak body for financial counsellors. It has a significant role in setting the framework for how the financial counselling profession operates nationally. This includes setting up a code of ethical practice and establishing several standards and policies to guide financial counsellors and agencies in their work.

Watch for the warning signs

While financial counsellors provide a valuable service to individuals in financial distress, you must be aware of potential red flags that may indicate you're not dealing with a legitimate financial counsellor. According to the National Debt Helpline, here are some warning signs to watch out for:

• • Charging set-up or ongoing fees. Genuine financial counsellors do not charge their clients any fees for their services. If you're asked to pay set-up fees or ongoing fees, run.
  • Receiving third-party commissions. Financial counsellors should not receive any payments or commissions from third parties – such as debt consolidators – for their services. This independence is crucial to ensure they act in your best interest.
  • Lending money. Financial counsellors do not lend money. Their role is to provide advice and help you navigate your financial situation, not to act as lenders.
  • Completing tax returns. A financial counsellor is not a tax agent. If someone offering financial counselling also offers to complete your tax return, they may not be legitimate.
  • Providing debt consolidation services. Financial counsellors can help you explore options for managing your debt, but they do not provide debt consolidation services. Be wary of anyone offering such services under the guise of financial counselling.
  • Offering investment advice. Providing investment advice is the role of financial advisors, not financial counsellors. A financial counsellor who starts giving you investment advice is a cause for concern.

Remember, a legitimate financial counsellor's primary role is to provide advice and support to help you navigate financial difficulties. If you're unsure about the legitimacy of a financial counsellor, feel free to ask for their credentials and check their status with the association in your state or territory.

What are my rights as a client of a financial counsellor?

Under the code of ethics, you have the right to:

• • Be treated with respect and dignity: Your financial counsellor should always interact with you in a respectful and non-judgmental manner.
  • Have your interests prioritised: Your financial counsellor's primary responsibility is to you. They should be committed to acting in your best interest at all times. Their aim is to provide guidance and advice that helps you manage your financial difficulties effectively and make decisions that benefit your financial well-being.
  • Receive clear and understandable advice: Your counsellor must ensure you understand the advice, explaining clearly and avoiding unnecessary jargon.
  • Confidentiality: Your discussions with your financial counsellor should remain private. This includes conversations facilitated by an interpreter if needed.
  • Informed consent: You have the right to fully understand the advice and decisions involved in your financial counselling process. Your counsellor must ensure you are informed before making any decisions, especially when they will be acting on your behalf.
  • Challenge the advice: If you disagree with the advice given, you have the right to question it and seek further clarification or a second opinion. But please note that duplication of services is not permitted. Therefore, should you seek a second opinion, you will be advised to choose only one counsellor to work with.
  • Request a different counsellor: If you're uncomfortable with your counsellor or dissatisfied with their service, you can ask to be referred to another.

Exceptions to the confidentiality rule

While confidentiality is a key principle in the relationship between you and your financial counsellor, certain exceptions apply typically due to legal or ethical obligations.

For instance, if a court or tribunal, during legal proceedings, orders that information from your files be divulged or a document be produced, your counsellor is obliged to comply.

Another scenario could involve a serious risk of imminent harm. For example, if you have communicated to your counsellor a serious risk of harm to yourself, to others known to you or to the general public, this could warrant a break in confidentiality.

Before breaking confidentiality, your counsellor should consider whether it's appropriate to notify you about the disclosure. And in deciding how much client information may need to be disclosed to third parties without your consent, your counsellor would weigh:

1. The requirements of any legal or ethical obligation,
2. The potential benefits of disclosing the information,
3. The potential harm to you or others that may result from the disclosure, and
4. The potential harm if the information is not disclosed.

If you have a complaint against your financial counsellor

According to the FCA, you can complain either to their employer or the state or territory association. Your choice will depend on the nature of your concern.

 

 

If you’re seeking a resolution, approach the employer, as they are tasked with investigating any complaints and working towards a resolution where possible. There should be a complaints form on their website where you can lodge your complaint.

However, please note that employers are not required to offer any form of compensation. If you feel you've lost money due to the advice provided by their financial counsellor, you can request compensation from them, but be aware that they are not legally required to provide it. In such cases, you may need to consider legal action.

If you’re seeking disciplinary action, make a complaint with the state or territory financial counselling association. The associations enforce disciplinary action, ranging from a warning to requiring further training or suspending or revoking their membership in severe cases. However, like employers, these associations are not able to offer compensation. They are solely responsible for determining if a financial counsellor's conduct merits disciplinary action.

As always, however, if you have any complaints about this process, get in touch and let us help you handle it.