..



.

Business News

The Royal Commission revealed financial services woes for many Indigenous customers. Here's what can be done

  • Written by Robynne Quiggin, Professor, University of Technology Sydney

For those of us who advocate for Indigenous consumers of financial services, it was both a relief and distressing to hear the evidence given this week at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry[1].

The evidence presented issues that fall into two main categories:

  • structural issues, arising from the operations of financial institutions not well adapted to the day to day circumstances of Indigenous people’s lives. (These include distance, language diversity, cultural obligations specific to Aboriginal and Torres Strait Islander community members, health, access to education and financial literacy, engagement in the economy) and;
  • the need for stronger regulation and enforcement activity to deter sharp practice and punish illegal conduct.

With enough will, informed policy and effective resourcing, most of the structural issues can be overcome. The second one will require stronger regulation and proper penalties.

Read more: Want to boost Aboriginal financial capability? Spend time in communities[2]

A lack of products and services that are fit for purpose

Aboriginal and Torres Strait Islander peoples face barriers to accessing mainstream banking, credit, insurance and superannuation services. That’s particularly true where the products and services are not fit for purpose, or where the services simply don’t exist.

As evidence from Financial Counselling Australia’s Lynda Edwards showed[3], many Indigenous people live hundreds of kilometres from branches. Road conditions can be poor. People might be cut off by wet weather for months at a time. Vehicles can be unreliable. And, as senior family support worker Thy Do explained, branch staff can be unhelpful[4] (to put it politely).

Consumer advocates also provided evidence of language barriers where English is the third or fourth language spoken, and product features like interest rates and insurance premiums are not well understood.

Cultural obligations

Cultural and family obligations also need to be factored into products and services to meet the needs of Indigenous customers.

Cultural and family obligations can provide a very effective financial safety net for Indigenous people. They can also impact on the resources of particular people. These relationships need to be understood by front line and policy staff. As Lynda Edwards from Financial Counselling Australia said[5]:

We have culture and kinship within our communities, and the understanding that one person can be responsible for another and the environment that they live in, so having kinship, which is a type of cultural obligation, will actually play a role in people’s financial affairs, and unfortunately most of the financial services don’t understand cultural obligation when it comes to hardship policies.

Cultural obligations and extended family relationships also need to be considered when superannuation is paid on a person’s passing. In the absence of a nominated beneficiary, proper respect for cultural and family relationships may require the superannuation be paid to someone other than the usual legally recognised beneficiaries. It may be, perhaps, an Aunt or Uncle who can distribute across the family.

Read more: The way banks are organised makes it hard to hold directors and executives criminally responsible[6]

These issues can be addressed

It may sound complex. But these structural conditions can be addressed effectively by mainstream banks, credit unions, insurers and superannuation funds. They simply need the sustained commitment to be informed, innovative and be willing to develop and resource effective options.

Good work has been done, including the fee-free ATM trial[7] discussed at the Royal Commission. Consumer advocates[8] lobbied to solve the problem of customers being driven into a debit balance and incurring dishonour fees when doing everyday banking. Things like checking the bank balance, or withdrawing cash where the only ATM available does not belong to their bank can result in high fees.

Fifteen banks continue to provide fee-free services in relation to 85 ATMs in remote areas. While there have been some bumps in the implementation, the removal of these fees is a good example[9] of a solution to structural issues in the system.

Substantial work has also been done over the years by the Australian Bankers Association and Austrac[10] to recommend practical solutions for customer identification, which can be complicated. Again, there are no easy fixes, but informed, innovative, flexible thinking builds knowledge and skill and creates solutions that can work across cultures, languages and experience.

Individual mainstream financial institutions have also made strong, genuine commitments to improve services. Like many of the issues heard at the Royal Commission, the trick will be in ensuring that this commitment is resourced and delivered across the institution, making its way to the front line staff and the customer.

Regulation and enforcement

Appallingly, where reasonable people see an Indigenous community battling low employment and economic hardship, others see a business opportunity.

These are often the smaller, less regulated financial service providers. They include pay day lenders and “rent to buy” traders who lease out common household goods like furniture and electrical goods to consumers who can’t access mainstream credit.

These loans or rental arrangements can come with very high interest rates, direct debits and confusing contracts. People often believe they are paying the goods off rather than renting them and may have no right to own at the end of the lease period. Some leases go on indefinitely.

Solution like increased employment, economic engagement, access to No Interest Loans (NILS) and financial literacy are all crucial.

However, predatory practices are ripe for stronger regulation and have only escaped due to industry lobbying and a lack of government will.

The Australian Securities and Investments Commission (ASIC) has made excellent recommendations to regulate this sector and provide more protection[11] for vulnerable consumers.

Engagement in the economy is dependent on access to our financial services system. Indigenous Australians have much to offer and much to gain from a suitably adapted system, relatively safe from predatory practices. We all hope that the Royal Commission will bring renewed enthusiasm for increasing the kinds of informed, innovative adaptations that take Indigenous peoples’ circumstances into account and increase our participation.

References

  1. ^ Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (financialservices.royalcommission.gov.au)
  2. ^ Want to boost Aboriginal financial capability? Spend time in communities (theconversation.com)
  3. ^ showed (financialservices.royalcommission.gov.au)
  4. ^ staff can be unhelpful (financialservices.royalcommission.gov.au)
  5. ^ said (financialservices.royalcommission.gov.au)
  6. ^ The way banks are organised makes it hard to hold directors and executives criminally responsible (theconversation.com)
  7. ^ fee-free ATM trial (financialservices.royalcommission.gov.au)
  8. ^ Consumer advocates (www.financialcounsellingaustralia.org.au)
  9. ^ a good example (www.ausbanking.org.au)
  10. ^ Austrac (www.austrac.gov.au)
  11. ^ more protection (static.treasury.gov.au)

Authors: Robynne Quiggin, Professor, University of Technology Sydney

Read more http://theconversation.com/the-royal-commission-revealed-financial-services-woes-for-many-indigenous-customers-heres-what-can-be-done-99374

Business Daily Media Business Development

Bahrain Property Show 2018: How does it reflect the real estate market development in Bahrain

It is no secret that the Arabian Peninsula and the Gulf Cooperation Council (GCC) countries are currently going through a lot of pivotal changes. Such changes do not include economic or po...

News Company - avatar News Company

Di Jones real estate recognises high achievers

Di Jones celebrated its outstanding performers on Saturday (24 February 2018) evening at the Di Jones Real Estate Annual Awards.                               The black-tie Gala Dinner s...

Helen Hull - avatar Helen Hull

Five Reasons Melbourne Rules

If you are traveling in Australia and have left Melbourne off your destination list, then you are going to want to reconsider. Many people consider Melbourne to the best city in the world...

News Feature Team - avatar News Feature Team

Making Friends During Your Campsite Stay

Part of the excitement of vacation is meeting people who you would never otherwise encounter. Staying at a campsite isn’t just about taking in nature. It’s also about sharing the beauty of n...

News Feature Team - avatar News Feature Team

Have More Fun On Your Business Trips

Whether you are a traveling salesman or someone who finds themselves on the road more than in their office you probably are grateful for any tips you can get especially if they involve havin...

News Feature Team - avatar News Feature Team

Traditions of Rural Bali at Villa Sabana

A Privileged Insight into the Traditions of Rural Bali at Villa Sabana  Situated in the traditional village of Pererenan near Canggu, Villa Sabana is peacefully secluded in a semi-rural...

Linda Lim - avatar Linda Lim

Business Daily Media Business Reports

Di Jones real estate recognises high achievers

Di Jones celebrated its outstanding performers on Saturday (24 February 2018) evening at the Di Jones Real Estate Annual Awards.                               The bla...

Helen Hull - avatar Helen Hull

Eclipse Travel Expands Operations to New Zealand

Eclipse Travel, specialists in key adventure destinations such as Antarctica, the Arctic, Africa and Latin America, have announced today their expansion of operations to ...

Yvonne Kong - avatar Yvonne Kong

How medical professionals can benefit from an overall wealth management solution

As a health care professional, you have made it your life's work to focus on the care and health of the general public. While this kind of work can be extremely rewarding...

News Feature Team - avatar News Feature Team

Why Pinterest Should Be Part of Your Marketing Strategy

Pinterest is a growing social media platform that can deliver significant traffic to your website and new followers to your brand. With it’s steady growth and outrageous ...

Greg Nunan - avatar Greg Nunan

The top reasons why gyms fail

Steve Grant is a Business Coach and Founder of GymHub.com.au   Every month thousands of new trainers walk out of their 6-month course with the qualifications needed ...

Steve Grant - avatar Steve Grant

WHITE LABEL NOBA’s Winter 2016 season: Earth + Country

Taking cues from the warm winter colours of tobacco and caramel, and combining them with the strength of navy and the embracing lightness of whites and creams; and then...

Kath Rose - avatar Kath Rose

Former Etihad boss brings substantial event insight to PMY Group Board

Paul Sergeant PMY Group, the architects of the digital insurgency occurring at major venues across Australia and New Zealand, are delighted to welcome 35 year even...

Annie Konieczny - avatar Annie Konieczny

More training for coffee making than property sales: REINSW

Sydney 9 May 2016. An overhaul of education and training standards for the real estate profession must take place to help prevent illegal activities, according to the Rea...

Helen Hull - avatar Helen Hull