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Insurers agree to co-fund financial counselling scheme

The Insurance Council of Australia (ICA) says the industry is participating in a $30 million co-funding agreement led by the Commonwealth to expand the provision of financial counselling services.

The ICA announcement today comes as the Federal Government says it has signed memorandums of understanding with the industry and other financial services sectors including the Australian Banking Association for the new Industry Funding Model for Financial Counselling.

“Financial counsellors play a vital role in supporting people who are experiencing financial hardship, and a sustainable funding model helps to ensure they can continue to provide their important service,” ICA CEO Andrew Hall said in a statement.

He says the insurance industry is committed to supporting financial counselling, and has been actively involved in discussions with other financial services and the Federal Government on the development of an industry co-funding model since 2020.

The funding model is in response to recommendations made by former deputy chair of the Australian Competition and Consumer Commission Louise Sylvan in her review of financial counselling after the Hayne royal commission referred to the importance of such services.

In her review Ms Sylvan made a number of recommendations. One was for additional funding to be collected from the financial services sector to meet the anticipated rise in demand for financial counselling.

Minister for Social Services Amanda Rishworth says the Government worked closely with industry representatives from banking and finance, energy, insurance, online gambling, Buy Now Pay Later, telco and the financial counselling sector to establish the new model.

“This new voluntary industry funding model is aimed at improving access to financial counselling services and sharing responsibility,” she said today.

“It has been designed to receive and distribute funding contributions from industries that contribute to demand for financial counselling, and benefit from these services.

“An extra $10 million a year in industry funding could help more than 25,000 people access services like face-to-face appointments with financial counsellors or the National Debt Helpline.”

The Government says the $30 million contribution from the financial services sector for the funding model is in addition to the Commonwealth’s provision of almost $50 million annually to support financial counselling services.

To support the industry funding model, the Government is investing $1.5 million to establish a new not-for-profit independent body that will collect and distribute industry funding.

The independent body will be responsible for decisions regarding funding allocations and prioritisation and will be established early next year, the Government says.