Wednesday 25 Jul 2018

Researchers complete major study on financial hardship in Australia

By: Evgenia Bourova, Melbourne Law School

In June 2018, researchers at Melbourne Law School, The University of Melbourne completed a multi-year research project on financial hardship in Australia.

Financial hardship refers to the situation where consumers find themselves unable to pay mortgage repayments, credit card bills, utility bills and other types of debt when they fall due.

The research team for the project consisted of Ms Evgenia Bourova (Research Fellow), Professor Ian Ramsay and Associate Professor Paul Ali. The project was funded by a Discovery grant from the Australian Research Council.

The project investigated the causes and impacts of financial hardship for Australians at different levels of income. The project focused particularly on the experiences of vulnerable groups such as people living on Centrelink incomes, people living in rural or regional areas, women who had experienced family violence, and recent migrants and refugees from a non-English speaking background.

The project evaluated the practical operation of Australia’s financial hardship laws – which were put in place to allow consumers facing payment difficulties to negotiate alternative payment arrangements with creditors in the banking, utilities and telecommunications sectors.

The project involved major surveys of financial counsellors around Australia, and over 1,100 Australians who had recently experienced debt problems. The research team also carried out focus group interviews with advocates such as consumer lawyers, financial counsellors and family violence support workers at organisations including Consumer Action Law Centre, Good Shepherd Australia New Zealand, Diversitat, Lentara UnitingCare, South East Community Links and WIRE Women’s Information.

The project resulted in a number of publications, including:

  • An article drawing on the experiences of financial counsellors to provide new insights into the hardship practices of creditors in the banking, utilities and telecommunications sectors.
  • An article discussing the coping strategies that Australians use to get by financially while dealing with debt problems, and in particular, the preference for taking measures to reduce spending over seeking help from creditors under the financial hardship laws described above.
  • An article analysing the legal frameworks for reporting on hardship practice by creditors in the consumer credit and energy sectors.
  • An article analysing the role of the Financial Ombudsman Service in resolving financial hardship disputes.
  • An article examining the history of the right to seek a credit contract variation on the grounds of hardship (contained in section 72 of the National Credit Code).
  • An article comparing the laws and industry codes containing protections for Australians in financial hardship, and analysing hardship policies published by energy and water companies.

These publications are available on the Financial Hardship Project web page, and more will become available in the coming months.

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