Helping consumers manage
their financial challenges

FC case complexity in Townsville

26/08/2016

Source: ican.org.au

By Ray Kent & Martina Kingi, Townsville Office

A typical day for the financial counselors in ICAN’s Townsville office often includes assisting clients who are dealing with mortgage stress, relationship debt stress and working with clients through various stages of bankruptcy. It’s been one year since the ICAN office first opened its doors last July, and we had to hit the ground running, in order to respond to the increasingly high demand for financial counselling services in Townsville. Since ICAN opened its doors last year, Townsville’s economic stability has significantly shifted and as financial counsellors, we have needed to be ready to respond to these shifts quickly, but also with care. As all of us in the sector are aware, financial counselling is as much about counselling and meeting clients where they are at, as it is about helping them to mitigate difficult financial matters.

The unemployment rate for Townsville as at June 2016 was 14.8 per cent – the highest since regional figures were first recorded in 1998 – so it can be seen that a significant proportion of residents are likely to have been affected over the last year. At the beginning of the year, we provided an overview of the bleak outlook facing employees in the resource industry, where Townsville was hit the hardest, when Queensland Nickel closed its doors. We reported on what we felt the impact of those job losses would be on the region, when 237 employees lost their jobs, likening this to a brewing ‘financial storm’.

AFSA reported in June that the number of business related personal insolvencies in Queensland increased by 16.8 per cent over the previous quarter, with the main contributor being increased insolvencies in Townsville.  Townsville also recorded 154 personal insolvencies in the June quarter and has recorded the highest in the country for several quarters. This situation is reflected in our figures in our client records recorded in our DSS database.  In our September-December quarter, our bankruptcy assistance was at its peak for the year – where the bulk of client matters were bankruptcy-related, where debt often related to a combination of mortgages, investments, business loans and general consumer credit debt. As at this month, the ICAN Townsville office has had 470 sessions under the heading of credit/debt issues and 165 sessions for bankruptcy compared to 306 sessions in Cairns for credit/debt issues and 11 for bankruptcy.

Further, Townsville house prices have declined 9.7 per cent over the last five years and Townsville unit prices have declined 13.5 per cent over the same period.  The Domain Group Chief Economist noted that “what was once a robust market has headed backward and there is no end in sight”. The priority for assisting clients with mortgage stress is to work with them to see if there is a temporary solution that allows them to get by until they are able to obtain new and/or more permanent employment.  Unfortunately, in many cases we are seeing people who are only able to find employment at lower salary levels than they had previously, further exacerbating situations where they are not always able to service their loan(s).  Often, for the clients we are seeing, their major debt is their mortgage, and where they have been required to sell their house, the decline in housing prices means they are often forced to sell at a loss.

Over the past year, the Townsville financial counsellors have generally seen clients across two significant domains: we receive many referrals from community services agencies, especially those dealing with clients that may find themselves in situations of homelessness or may be experiencing vulnerability in this area. Here, vulnerability may be heightened due to debts related to small credit contracts – carrying small loans or consumer leases.  The priority is to assist our clients to be able to resolve these quickly so that they have sufficient money to live on.  As financial counsellors well know, it requires a coordinated approach implemented with care when seeking to reduce some of those vulnerabilities for our clients. The other domain of clients we are seeing coming through our doors, are clients who may have (or had) reasonable incomes, but where high debts have accrued. These debts are often multiple and complex, and may relate to a mortgage, car loan, credit cards, etc.   The client’s circumstances have then changed due to unemployment, illness, business failure or a relationship breakdown. Much of the presenting matters at the Townsville office are complex matters, where we are not dealing with the issues noted above, in isolation. At any given time, issues of relationship debt after divorce or separation, may overlap with mortgage stress and assisting a client to explore bankruptcy options. It’s not unusual for a typically complex client case to be handled over a six-month period. But in very recent times, we started to see an increase in clients presenting with complex debt issues relating to domestic violence and mental health issues. Last week, four of the six new cases taken on by one financial counsellor, are domestic violence related. It is here where care is needed – not only in how we approach and work with each client matter, but also in how we care for ourselves.

So, we’ve been keeping busy down here in our Townsville office and we are looking forward to another great year, providing needed financial counselling to the region! We have a new addition to the team as well. Tayla Smith is ICAN’s newest Administration Trainee and is with us while she completes her Certificate I in Business Administration with Access Community Services, over the next 18 months.

We continue to provide weekly outreach support to Palm Island, via the PCYC office. ICAN’s outreach service to Palm Island includes providing: financial counselling support for people facing financial hardship, offering financial literacy workshops and further financial capability services. Appointments are available each Tuesday from 9:00 a.m. – 2:00 p.m.

The ICAN office is located at Unit 2, 95 Denham St in the Townsville CBD. Appointments can be booked by calling the office at: (07) 4417 1900 and fax: (07) 4417 1999. Appointments may also be booked by ringing 1300 369 878.