Melbourne Law School - Research Publications
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ItemFinancial hardship assistance behind the scenes: Insights from financial counsellors(WILEY, 2017-09)Abstract Financial hardship, in a credit society such as Australia, can affect almost anyone. To protect consumers from the negative impacts of financial hardship—which can include the stresses of enforcement action and disconnection from essential services—legal protections have been incorporated into the regulatory frameworks for the consumer credit, energy, water and telecommunications sectors. In this article, we outline the findings of our study, which used a survey of financial counsellors around Australia and focus group interviews with Victorian financial counsellors to examine how these legal protections are being implemented by service providers in these four sectors. Our findings highlight a tendency on the part of service providers to take a generic, one‐size‐fits‐all approach to compliance with these legal protections that prevents them from effectively assisting consumers struggling with debt. We discuss the particular shortcomings of this approach in the context of consumers living on low incomes—especially Centrelink incomes—and outline the policy implications of our findings for assisting these vulnerable groups.
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ItemAustralia's Financial Ombudsman Service: An Analysis of Its Role in the Resolution of Financial Hardship Disputes(WILEY PERIODICALS, INC, 2016-12-01)The Financial Ombudsman Service (FOS) was established in 2008 to resolve disputes between Australian consumers and financial service providers. This article outlines the role of FOS in resolving disputes under the statutory protections for Australians in financial hardship. This article also sets out the results of a study of data collected by FOS in relation to financial hardship disputes resolved between 2010 and 2014. This data highlights the importance of FOS in a context where most disputes are resolved outside the courts, particularly in the aftermath of the global financial crisis, when the number of financial hardship disputes rose significantly.
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ItemThe Distinctive Features of Women in the Australian Bankruptcy System: An Empirical Study(Wiley-Blackwell Publishing, 2019)According to data published by Australian Financial Security Authority (AFSA), Australian women and men offer strikingly similar reasons for their entry into bankruptcy. Yet a more detailed analysis of AFSA’s data indicates that women and men often go bankrupt in very different social and economic circumstances. This empirical study draws upon a unique dataset, obtained from AFSA, containing the de-identified records of more than 28,000 individuals. It also draws upon a series of focus groups with the staff of three nonprofit organisations, including financial counsellors and consumer solicitors. It finds that, in general, women in bankruptcy are likely to be economically disadvantaged, relative to men, as measured by income, access to wages, reliance on government benefits, real estate ownership and utilities debt. It also finds that women in bankruptcy are much more likely than men to be single with dependants and that these women experience a greater degree of gendered disadvantage than other women in the bankruptcy system.
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ItemMore to Lose: The Attributes of Involuntary Bankruptcy(WILEY, 2019-03)While the majority of those who declare bankruptcy do so voluntarily, a significant proportion are forced into bankruptcy as a result of legal action. This paper interrogates data obtained from the Australian Financial Security Authority to explore the attributes of debtors who go bankrupt involuntarily. Based on this analysis, the authors hypothesise that people who go bankrupt involuntarily are those who have more to lose by going bankrupt – such as a family home, a business venture or a managerial or professional occupation – meaning that they are more likely to resist bankruptcy until they are forced into it by their creditors.
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Item‘Contrary to the Spirit of the Age’: Imprisonment for Debt in Colonial Victoria, 1857-1890(Melbourne University, Law Review Association, 2019)The reintroduction in 1857 of imprisonment for debt in colonial Victoria flew in the face of international momentum for its abolition. In its criminalisation of debt and poverty, the Fellows Act 1857 (Vic) (21 Vict, No 29) also defied the rapid advancement of democratic and egalitarian principles in the fledgling colony. Frequently referred to as ‘gross class legislation’, the law was used unabashedly to target poor small debtors, leaving ‘mercantile men’ with significant debt untroubled by the prospect of a debtors’ gaol. Despite consistent and broad opposition to the Fellows Act 1857 (Vic) (21 Vict, No 29), its advocates resisted repeated attempts to abolish or meaningfully amend it. It is argued here that the law, and its survival against the ‘spirit of the age’, can be understood as part of a broader story of conservative resistance to the democratic innovations that threatened the power of the Victorian mercantilist establishment.
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ItemLimitations of Australia's Legal Hardship Protections for Women with Debt Problems Caused by Economic Abuse(University of New South Wales, 2019)Research on economic abuse has identified multiple ways in which perpetrators use debt to exercise power and control over women in violent relationships. However, there have been few attempts to evaluate consumer credit law’s role in responding to perpetrators coercing or deceiving women into taking on debt in their own names or in joint names. At present, one option for women managing such debt is to negotiate payment arrangements with creditors under the legal protections for Australians in financial hardship. In this article, the authors draw upon focus groups with consumer advocates to examine the extent to which these protections and their implementation by creditors facilitate – or undermine – women’s financial recovery. The authors argue that these protections have limited capacity to assist victims of economic abuse, in the absence of provisions for severing liability for joint debt incurred in the context of gendered dynamics of power and control.
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ItemImpacts of Financial Literacy and Confidence on the Severity of Financial Hardship in Australia(University of Wollongong, 2018)Consumers in Australia and other developed countries are increasingly required to interact with providers of complex financial products and services, and to estimate, mitigate or absorb the risks that flow from their financial decisions. A range of debt-related problems in Australia have been attributed to low levels of financial literacy in the population. However, there has been limited research exploring the relationship between low financial literacy and the problem of financial hardship, where a consumer takes on payment obligations under a contract, but then becomes unable to meet them when they fall due. Drawing on a survey of Australians who recently experienced debt problems, this article examines the impact of financial literacy levels and levels of confidence in managing day-to-day spending on severity of financial hardship. The article also examines the impacts of financial literacy and confidence levels on the strategies employed to get by financially while in debt. The article shows that while there is no straightforward relationship between low financial literacy and severity of financial hardship, lower levels of financial literacy may reduce consumers’ ability to avoid some of the more serious consequences of default, particularly if coupled with overconfidence about their ability to manage spending.
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ItemThe Hidden Dimension of Business Bankruptcy in Australia(Thomson Reuters, 2018)This study is the first empirically based analysis of business bankruptcy to be conducted in Australia. It aims to identify key differences between debtors who declare business bankruptcy and those who declare non-business or “personal” bankruptcy, and to explore the extent to which there might be a “hidden” population of business debtors among those formally identified as personal debtors. This question is significant in light of the Commonwealth Government’s imminent changes to bankruptcy law, which will reduce the period of bankruptcy from three years to one in a bid to promote entrepreneurship. Some commentators suggest that these reforms should only apply to business debtors. However the authors find strong evidence that there are clusters of “personal” debtors whose bankruptcies are in fact wholly or partly business-related. The authors conclude that any changes to the bankruptcy regime should apply to all debtors. Given the difficulty of drawing sharp distinctions between business and personal bankruptcy, this is both more practical and more desirable, as a matter of public policy.
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ItemRegulating by numbers: the trend towards increasing empiricism in enforcement reporting by financial regulators(ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD, 2015)
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ItemThe Statutory Right to Seek a Credit Contract Variation on the Grounds of Hardship: A History and Analysis(Australian National University, Faculty of Law, 2016)In this article, we focus on one of the most important statutory protections for Australian consumers in financial hardship: the right to seek a variation of a credit contract contained in s 72 of the National Credit Code. We provide a comprehensive history of this right, which has been part of Australian consumer credit law since the 1970s. Over the years, it has evolved from a very limited right to seek an extension of time to pay a debt on grounds of illness and unemployment, to a broader provision that requires credit providers to comply with a prescribed process before they can commence enforcement action against a consumer who has sought a variation to their payment arrangements. We also undertake an analysis of the evolution of this right to demonstrate that despite improved understandings of the causes of financial hardship, it continues to envisage a middle-class subject with a strong awareness of their rights, and excludes some particularly vulnerable consumers. This right is also representative of a regulatory approach that envisages a limited role for consumer credit law, and does not sufficiently address the imbalance of bargaining power between the consumer and the credit provider. We argue for the imposition of an obligation to provide a minimum range of hardship assistance directly upon credit providers, as a means of addressing this imbalance and ensuring more meaningful protection for consumers in financial hardship.