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Update for FCRC September 2013

Update for FCRC September 2013. What is the Debt Repayment Service?. A joint initiative between Melbourne-based financial institutions: ANZ, GE and NAB and Financial Counselling Australia The DRS is a social enterprise Any surplus is used for the public good Based on a model from the UK

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Update for FCRC September 2013

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  1. Update for FCRCSeptember 2013

  2. What is the Debt Repayment Service? A joint initiative between • Melbourne-based financial institutions: ANZ, GE and NAB and • Financial Counselling Australia The DRS is a social enterprise • Any surplus is used for the public good Based on a model from the UK • StepChange (ex Consumer Credit Counselling Service) • This service has 900 staff and interacts with 400,000 consumers per annum

  3. How does it work? How does it work? • Assists people who can’t repay all of their debts, but can pay a portion • Debts frozen or reduced • Consumer makes one payment to the DRS and this is distributed pro rata to creditors • Creditors pay an administration charge • Calculated as a percentage of the payment Principles • Freefor consumers • Consumers are fully informed about all of their options • Financial counselling remains a completely separate and independent function • Stakeholder board (see next)

  4. Structure • Structure is the same as the Financial Ombudsman Service • Company limited by guarantee • Stakeholder board • Independent Chair (Colin Neave) • 3 industry (ANZ, GE and NAB) • 3 consumer • Carolyn Bond • Fiona Guthrie • Jim Connolly

  5. Why is the financial counselling sector involved? To respond to both “threats” and “opportunities” Threats • For-profit providers starting to offer this service • Not-for-profits or charities also investigating • Either way, these services were likely to swamp financial counselling • May not be ethical Opportunities • If done ethically, a DRS will benefit clients

  6. Next Steps Proof of Concept • Starting in next few months • Testing the underlying systems and processes • 30 clients • Unsecured debts only with ANZ, GE or NAB • No more than $30K in total and $15K with any one creditor • Clients will speak to an independent financial counsellor to make sure that all options are considered Pilot • Start in early 2014 and run for 12 months • 100 clients • Testing financial viability, likely demand, referral sources etc

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