Review of Financial Counselling Support · PDF fileReview of Financial Counselling Support Services Terry Simpson Page 6 Setting standards for financial counselling, including operating

Department for Child Protection

Review of Financial Counselling Support Services

Terry Simpson July, 2010


Terry Simpson Page 1

Contents Chapter 1 - Introduction ......................................................................................................................... 2

Background ......................................................................................................................................... 2

Methodology ....................................................................................................................................... 3

Chapter 2 – About the two Organisations .............................................................................................. 5

Financial Counsellors’ Association of Western Australia .................................................................... 5

Aims................................................................................................................................................. 5

Membership .................................................................................................................................... 5

Structure ......................................................................................................................................... 5

Functions ......................................................................................................................................... 5

Funding ........................................................................................................................................... 6

Financial Counsellors Resource Project .............................................................................................. 7

Aims................................................................................................................................................. 7

Membership .................................................................................................................................... 7

Structure ......................................................................................................................................... 8

Functions ......................................................................................................................................... 8

Funding ........................................................................................................................................... 8

Chapter 3 - Key Information and Findings .............................................................................................. 9

1. Cost effectiveness and efficiency of the current organisational structures ............................... 9

2. Consideration of the options .................................................................................................... 10

Option 1 – Continuing the current organisational structure ........................................................ 10

Option 2 – Merge FCAWA and FCRP into a single entity .............................................................. 12

Option 3 – Creation of a new single entity ................................................................................... 14

3. The merits of a single entity ...................................................................................................... 14

Defining the organisation.............................................................................................................. 15

Constitution and governance ........................................................................................................ 16

Management and staffing ............................................................................................................. 16

Pathway to integration ................................................................................................................. 17

4. Additional support services ...................................................................................................... 19

Chapter 4 – Conclusions and Recommendations ................................................................................. 21

Appendix 1 – Stakeholder Interviews ................................................................................................... 23



Chapter 1 - Introduction

Background

The Department for Child Protection (DCP) provides funding to the Financial Counsellors’ Association

of Western Australia (FCAWA) and Financial Counsellors Resource Project Inc (FCRP) through two

separate three-year Service Agreements to deliver support and professional development services to

the financial counselling sector in Western Australia. The FCAWA and FCRP receive annual funding

of $249,000 and $148,200 respectively.

The Department commissioned this independent review of the current support and professional

development services provided by FCAWA and FCRP in May 2010. The purpose of the review is to

examine the current organisational structures and identify the most appropriate organisational

structure to:

Strengthen and streamline organisational structure(s) that support the delivery of financial

counselling improved outcomes for individuals and families experiencing financial

difficulties; and

Improve the organisations’ structural effectiveness and efficiency in how support and

profession al development services are provided towards advancing the professional

practice standards and resources for the financial counselling sector.

The review was overseen by a Reference Group comprising representatives of the Department and

both organisations under review.

Terms of Reference

The Terms of Reference required the review to consider:

1. The cost effectiveness and efficiency of the current organisational structures.

2. Consideration of the following options:

a. Continuing the current organisational structure, i.e. maintaining FCAWA and FCRP as

two separate entities;

b. Merge FCAWA and FCRP into a single entity; or

c. Creation of a new single entity.

The review should also clearly identify the preferred model out of Options a, b or c.

3. In considering options b and c, undertake a comprehensive analysis on the merits of the two

organisations consolidating into a single entity or creation of a new entity including:

Legal and logistical considerations;

Constitutional and governance matters such as qualification for membership of the

organisation, and to the Management Committee;

Current ATO status of each organisation;

Staffing issues

A proposed organisational structure for any proposed single entity;



The effect a single entity may have on other funding arrangements including the Law

Society of Western Australia and FaHCSIA; and

Any other issues relevant to stakeholders.

4. Any additional support services that could improve the efficiency and effectiveness of

individual financial counsellors and the WA financial counselling sector in general.

Methodology The project methodology comprised the following stages.

Project Commencement

At the initial project meeting this included:

Clarification of project brief

Confirming proposed methodology

Identifying key project contacts and data sources.

Background research

This stage involved the gathering of all relevant information to inform the project

including:

A site visit to each organisation, briefings by the manager and provision of

relevant documentation and data

Review of relevant documents and reports.

Consultations

This critical stage involved getting the input of key stakeholders on the issues raised by

the terms of reference. Consultations occurred with:

A list of stakeholders provided by the reference group and others subsequently

identified during the course of the project1

Two focus groups involving randomly selected financial counsellors, one with

metropolitan financial counsellors and another, by teleconference, with rural and

remote counsellors2.

Analysis and solution development

This stage comprised two parts:

An analysis by the consultant of the information gathered in the preceding stages

in the context of the terms of reference

A presentation of preliminary options to the Reference Group for discussion and

joint consideration.

1 See Appendix 1 for full list of stakeholders consulted.

2 Focus group participants were guaranteed anonymity so are not listed in the Appendix.



Reporting

Based on the outcomes of the Reference Group discussions:

A draft report was provided for consideration and feedback

Provision of a final report following receipt of feedback.



Chapter 2 – About the two Organisations

Financial Counsellors’ Association of Western Australia

Aims

The aims of the Association as outlined in Clause 2 of its Constitution are:

(a) To represent and advance the interests of the profession of Financial Counselling and that of Financial Counsellors;

(b) To contribute to the continued development of Financial Counsellors knowledge; (c) To actively support policy development and social structures pursuant to the promotion

of Social Justice; (d) To establish, monitor, promote and improve practice standards for Financial

Counsellors; (e) To lobby for the provision and maintenance of adequate and autonomously funded

financial counselling services.

Membership

Clause 5 of the Constitution defines four categories of membership:

Accredited Member – a suitably qualified financial counsellor who currently fulfils all of the

requirements for accreditation

Associate Member – a financial counsellor who is receiving the required level of professional

development, training and supervision

Affiliate Member – someone working in an approved field of work related to financial

counselling

Subscriber – any individual or organisation supporting the aims of the Association.

Only Accredited or Associate Members have the right to vote or hold office in the Association. A

membership list provided by the Association identified 71 Accredited or Associate Members in all.

Structure

Clause 12 of the Constitution provides for an Executive Committee elected from the membership, of

at least 5 members. It does not stipulate any maximum number of Executive Committee members.

It includes three elected office bearers of President, Secretary and Treasurer.

The day to day operations of the Association are headed by an Executive Officer. Other staff include:

An Office Manager (3 days/week) and full time Administrative Assistant

A Hotline Coordinator and three Hotline Counsellors.

Functions

The current functions undertaken by the Association include:

Representing the interests of members, including advocating on behalf of members

Contributing to policy development by participating on Government policy and project

steering committees



Setting standards for financial counselling, including operating a system of accreditation for

membership

Information, support and training to financial counsellors including a web site, an online

manual for financial counsellors and an annual conference

Information for the general public on financial counselling and consumer issues

A Financial Counselling Hotline providing financial counselling services to the public (NB. The

aims of the Association as outlined in the constitution do not include service provision,

raising the question about the constitutional authority to undertake this function.)

The system of accreditation that underpins eligibility for membership of the Association is important

in the context of exemption from ASIC3 requirements for licensing of persons who engage in credit

activities. The exemption is contingent on a number of conditions including that financial

counsellors are appropriately trained and that they are a member of or eligible for membership of “a

relevant financial counselling association”. The review was advised that there is a possibility of some

form of uniform national accreditation of financial counsellors in future. Meanwhile, however, the

system of accreditation implemented in Western Australia by FCAWA appears to be highly regarded

nationally and Western Australia is seen as something of a leader in this regard.

The funding contract with the Department for Child Protection does require the provision of “a

Locum Financial Counselling Service”, however a shortage of financial counsellors has rendered this

difficult. The Hotline now partly meets this need by providing a telephone service to people

awaiting an appointment with a financial counsellor.

Funding

A financial statement for the 2009/10 year to May 2010 shows a total income for the financial year

of $882,658. Of this $215,500 is identified as being from the Department for Child Protection,

including $24,700 for the Financial Counselling Hotline. It is reported that ongoing funding from the

Department comprises approximately $150,000 annually for core funding and $100,000 for the

Hotline.

The Service Activities funded under the core funding4 include:

Office administration

Membership accreditation

Collaboration with FCRP on training, legal support, casework guidance and

information/resources

Ongoing liaison with Australian Financial Counselling and Credit Reform Association

(AFCCRA)

Assist in the implementation of the Hardship Utility Grant Scheme (HUGS)

Promote financial counselling services to the public

Maintain FCAWA website

Establish and manage a locum financial counselling service.

3 Australian Securities & Investments Commission

4 As per Service Specifications



The Hotline was established with funding from the Department of Families, Housing, Community

Services and Indigenous Affairs (FaHCSIA), and the Department has funded one additional Financial

Counsellor.

Other substantial sources of funding identified in the financial statement include:

FaHCSIA - $321,250 for the Hotline and $162,000 one-off funding for training.

Conference income - $89,780

Project Management - $58,000

Grant for manual update - $20,000

Membership fees - $14,700

Clearly FaHCSIA is the other key funding agency, particularly with regards to the Hotline. Another

grant for financial literacy training has been approved for 2010/11 and the Hotline contract expires

on 30 June 2011. FaHCSIA representatives advise that the amount of Commonwealth funding for

financial counselling nationally will decrease by about 50% from 1 July 2011, due to the end of

funding associated with the Global Financial Crisis. This means that the availability and quantum of

Commonwealth funding beyond that point is at this stage unclear. It is the understanding of FCAWA

that this will affect only one position on the Hotline.

Financial Counsellors Resource Project

Aims

The Objects of the FCRP, as outlined in Clause 3(1) of its constitution are:

To ensure access by low income people in Western Australia to financial counselling services by:

a) Promoting the role and effectiveness of financial counselling in Western Australia

b) Enhancing the effectiveness of financial counsellors in Western Australia by providing

resources, support and information to assist them in their work

c) Facilitating the development of an active and supportive network for financial counsellors in

Western Australia to share information and concerns arising from heir work

d) To provide, coordinate and participate in professional development education for financial

counsellors in areas of frequent inquiry, perceived need and recent innovation

e) To identify and monitor trends and common issues emerging through financial counselling

and facilitate education and action on these issues by financial counsellors and support staff.

Membership

Clause 5(1) of the constitution provides that membership of the association is open to persons

without conflict of interest who:

a) Work as financial counsellors or credit advocates in Western Australia; or

b) Who are actively interested in and supportive of the aims of the Financial Counsellors

Resource Project of Western Australia Inc.

The 2008/09 Annual Report lists 17 members of the organisation, of whom two were staff members

and two were the principal and staff member of the legal firm engaged on contract by the

organisation.



Structure

Clause 10(1) of the Constitution provides for the management of the organisation by a Committee of

Management consisting of a Chairperson, Vice-chairperson, Secretary, Treasurer and 2-5 other

members.

The day to day operations are the responsibility of an Executive Manager. Other staff include a

Professional Development Officer and an Information & Administration Officer.

Functions

The current functions undertaken by FCRP include:

Legal advice and casework guidance to financial counsellors

Information, resources and support, including resource library, FCRP website and

newsletters

Facilitating training

Addressing social action issues

The promotion of financial counselling

Referring the public to a financial counselling service

Developing resource materials for Financial Counsellors

Casework support meetings

Funding

The 2008/09 Annual Report reports total income of $265,773, including $143,120 funding from the

Department for Child Protection. The service agreement with the Department requires that these

funds be directed to the following services:

Research, collect and develop resources and information relevant to financial counselling

casework

Maintain resources with relevant and up-to-date information

Provide advice, including legal advice, to financial counsellors and staff from the Department

for Child Protection, regarding financial counselling casework- advice to be provided

statewide via telephone, facsimile, meetings and /or mail outs

Undertake and/or facilitate professional development opportunities (in partnership with

other sectors).

The other major funding sources are:

Public Purposes Trust - $61,451 for legal advice services (this is combined with the funding

for 15 hours per week in the Department’s funding, to engage a solicitor on contract to

provide legal advice and casework guidance to financial counsellors)

FaHCSIA – $60,000 for resource support to financial counsellors (this funding has been

provided for about 20 years).



Chapter 3 - Key Information and Findings This chapter will address each of the Terms of Reference in turn, outlining key information from the

background research and consultations, and the findings of the review relating to that term of

reference.

1. Cost effectiveness and efficiency of the current organisational

structures Excluding funding for the Hotline and one-off grants, the combined income of both organisations

from all sources (including conference income) to fulfil their core responsibilities is approximately

$520,000, of which approximately $250,000 is currently spent on employment related costs and

$58,700 on the contract for legal support.

Considering the scope of the objectives of the two organisations, this is a relatively small amount of

funding to address some ambitious outcomes. Both organisations appear to manage their funds

well and have shown initiative in attracting other sources of funds. There was no evidence of

inefficiency on the part of either organisation in terms of its current internal organisational structure

or the way in which it conducts its current operations. Both were highly regarded by those

consulted, both within the State and nationally, in the way in which they go about their business and

the value they produce for the funds receive.

However the effect of splitting the work between two organisational structures does appear to

create substantial inefficiency in a number of respects:

A duplication of management structures with the available talent spread between two

committees of management

Similarly two manager positions employed to manage the two separate entities

The need to support and report upon two sets of finances, provide two annual reports and

satisfy all other governance requirements of two organisations

The existence of two separate websites, each developed and maintained separately and

including substantially overlapping information

The maintenance of two offices, reception points, office systems and procedures and other

supporting infrastructure

Both being involved in the provision of training and resource materials for financial

counsellors, with little apparent coordination

Until recently the two organisations were co-located however this seems unlikely to

continue.

Many of those consulted were of the view that considerable savings could be achieved through the

formation of one organisation and those savings utilised to provide more and better services.

Others pointed out that by bringing the two organisations together the work of two people would

not automatically reduce to one and that core tasks would still have to be performed. This is

acknowledged , however the conclusion does seem inescapable that the costs of maintaining two

separate organisational structures is always going to be greater than one and that those additional

costs are therefore at the expense of funds available to achieve core objectives. This is particularly

the case when dealing with limited resources available and the very small constituency being served.



2. Consideration of the options The Terms of Reference required that three options be considered.

Option 1 – Continuing the current organisational structure

Under this option FCAWA and FCRP would continue as two separate entities.

There was considerable support among a number of those consulted for maintaining the status quo.

Among the reasons for this was a view that FCRP has developed substantial credibility in providing

high quality training and support for financial counsellors and that this could be lost if the

organisations were to combine under one, particularly with the current focus on the newly

established Hotline. In this context, maintaining two separate organisations was seen as a means of

safeguarding the future of the current functions performed by FCRP.

Another reason advanced by a number of informants for maintaining the status quo related to the

history of funding of the two organisations. As described to the review, the genesis of the current

arrangements was that FCRP was originally a project established by FCAWA that subsequently

became an independent organisation. It is reported that at the time this decision was taken as a

consequence of the difficulty for FCAWA, as an association of financial counsellors meeting at widely

spaced intervals, to provide the detailed and continuing oversight of funded functions with staff and

premises. Given FCAWA’s current organisational status, administering a substantially larger amount

of funding than FCRP, this consideration no longer appears relevant.

Also of concern to some was the historical Government decision to defund all peak organisations, of

which FCAWA was regarded as one and hence received no funding by Government for almost

twenty years, until the current funding contract was established. The fear expressed by a number of

informants was that, should history repeat itself, all funding being provided to the one peak

organisation might be in jeopardy.

Curiously, although regarded by the Department and itself as a peak organisation, FACWA does not

fulfil the fundamental requirements of an accepted definition of “peak”, e.g.:

“…an organisation which represents the interests of a number of other organisations with

similar interests, especially in developing policy, lobbying, etc.”5

The essential attribute of a peak organisation is that it represents the interests of other member

organisations. However the membership of FCAWA, as defined by the constitution, comprises

individuals, not organisations. Those individuals can only be financial counsellors, and the first aim

of the organisation, according to its constitution is “to represent and advance the interests of the

profession of Financial Counselling and that of Financial Counsellors”.

Essentially, then, FCAWA is a professional association of financial counsellors, not a “peak”.

Apart from perceived inefficiencies associated with maintaining two organisations, the major other

disadvantage quoted of having two organisations was a degree of confusion about who does what

and a lack of coordination between the two organisations. Although one of the funding

requirements of FCAWA is collaboration with FCRP, information from a number of the key players of

5 Macquarie Concise Dictionary, Revised 3

rd Edition, 2004.



both organisations suggests that the extent of genuine collaboration is minimal. Indeed the

impression created during consultations was more of two rival organisations than of agencies

working in partnership.

One example of the role confusion quoted by some of the financial counsellors consulted was

difficulties they are experiencing with regard to accessing the TAFE course in financial counselling.

They are not sure whose responsibility it is to help resolve these issues and claim to have

approached both organisations without success. The coordinator of the TAFE course reports a very

positive and productive relationship with FCRP, including arrangements to credit their training

towards the Diploma, but that she has less contact with FCAWA. As a separate issue she also

advised of the potential to get funding for traineeships through the Industry Skills Council. This

would require a formal arrangement with FCAWA as the representative body for financial

counsellors. The bringing together of initiatives such as this is made more complex by the existence

of two bodies dealing with the education and support of financial counsellors rather than one.

Another example of role confusion and duplication of purpose relates to funding for training. Last

financial year FACWA received Commonwealth funding under the Stimulus Package, as did other

State associations, to provide financial literacy training. Ultimately that training was purchased

through FCRP, a sensible solution but one that involved a degree of inter-organisational negotiations

which would have been unnecessary had there been one organisation in the first place. FaHCSIA

have advised that further funding for training will be provided to FCAWA this financial year, thus

creating a repeat of the same issue.

Several informants raised perceived conflicts of interest in the current situation, most of which

would also apply to the two alternative options. They are outlined below together with some

comment.

A perceived conflict between the accreditation role and promoting the interests of members

– inevitably in unregulated professions, such informal accreditation as does exist is generally

undertaken by the relevant professional association (e.g. CPA Australia; Australian

Association of Social Workers) as the body with the greatest interest in maintaining

professional standards. Professional associations invariably have the representation of the

interests of their members as a key role. Sound governance arrangements can allow such

potential conflict as may exist here to be properly managed.

A perceived conflict between being a peak body and a service provider – this would be the

case if FCAWA were a peak body and directly competing with member organisations for

business; however this is not the case as FCAWA is an association of financial counsellors,

not a peak organisation.

A perceived conflict between being a professional association and a service

provider/employer – this conflict is already a reality with regard to the Hotline as it in effect

places Association members in a commercially competitive situation with their employing

organisations. One former Committee member was placed in a position of direct conflict by

working on the Association’s tender in direct competition with his employing organisation,

resulting in a requirement by the employer to resign from the Committee. In addition, the

capacity of the Association to represent the interests of its members with employing



organisations is likely to be compromised if it is in direct commercial competition with those

organisations. The resolution of this conflict deserves serious attention.

A perceived conflict between the advocacy role of a professional association and receiving

Government funding – as long as the Association uses its own resources to support that

advocacy (e.g. membership fees) there is no direct conflict, however there is always the

potential for that advocacy to be less potent because of the risk of losing government

funding. This is one of those areas where a balance has to be struck by organisations that

depend for their survival on government funding. Conversely however, it could be said that

the ability to actually influence government is strengthened by these partnership

arrangements and that this is more effective than conflict models of advocacy.

A perceived conflict between organisational management responsibilities and accreditation

– a view that accreditation could become diluted to suit organisational needs. This is the

sort of potential conflict that most organisations have to balance with respect to their

diverse responsibilities and which good governance arrangements can address. No evidence

was provided that this has been an issue with respect to the Association’s accreditation

requirements.

All organisations have within them the potential for conflicts of interest and the important thing is to

recognise where those potential conflicts exist and put in place the appropriate governance

arrangements to reduce the potential for potential conflicts to become real and to manage those

conflicts that do arise.

Option 2 – Merge FCAWA and FCRP into a single entity

Advice from several sources is that legally, a formal merger is not a possibility.6 Section 30 of the

Associations Incorporation Act 1987 provides for the winding up of an incorporated association and

Sections 33 and 34 provide for the distribution of surplus property to another incorporated

association with similar aims, as well as the transfer of activities including rights and liabilities.

However the Act makes no provision for two incorporated associations to merge.

It would seem then that the option does exist of transferring all of the functions and assets of one

organisation to the other and then dissolving the redundant organisation. This would require

negotiations with the other funders for the novation of the funding agreements from one

organisation to the other.

The advantage of this option is its relative simplicity, in that it is making use of one of the existing

incorporated bodies rather than commencing the process of incorporation over again (as will be

discussed in option 3) and winding up both existing organisations. Sections 17-19 of the Act provide

for alteration of rules, change of name and alteration of objects and purpose of incorporated

associations, to the extent that these would be required by the remaining organisation to undertake

the additional functions. However given that the Project was once a part of the Association and the

Aims of the Association appear sufficiently broad to undertake all of the current functions of the

Project, this would not appear to be a substantial issue if FCAWA were to be the remaining

organisation.

6 As the reviewer is not legally qualified, this statement should not be relied upon as a formal legal opinion.



There are, however, a number of apparent disadvantages with this option, the foremost being that it

would be perceived by FCRP as a takeover of their organisation by FCAWA and this is likely to be

viewed with concern by their members, thus limiting the chances of it getting their support.

Similar anxieties would almost certainly be felt by FCAWA if the roles were to be reversed, however

the very limited membership of FCRP and the relative narrowness of their Objectives, would appear

to limit the suitability of that organisations to take on all of the roles and functions of the

Association.

Issues of great concern to FCRP if their functions were to be taken on by the FCAWA include whether

professional development, support and training would be accorded similar priority and administered

with the same level of expertise as is currently the case. This issue is not insignificant. Feedback

from all informants, both within Western Australia and nationally, indicate that FCRP has a very high

reputation for providing quality training and that this is highly valued by the recipients of that

training. It is important that this not be lost.

There was also comment that over time there have been periods of instability in the governance of

FCAWA, while the management of FCRP has been much more stable, creating a risk that the

functions now performed by FCRP might suffer from being thrust into a less stable environment.

The fact that FCRP have developed some very good policies and systems that should not be lost was

also raised.

Concerns were also expressed for the future of existing FCRP staff and how they would be dealt with

in this situation. A related issue is that FCAWA does not have Public Benevolent Institution status

with the Australian Taxation Office, as does FCRP, which would adversely affect the salary sacrificing

entitlements of staff on transfer.

An issue that has been raised in relation to any combination of the functions of both organisations is

a perceived conflict of interest between the accreditation role and the provision of training and

development, in that the organisation would be setting the standards for its own training. However

it is common for self-regulating professional associations to provide training to their members in

addition to their accreditation function. With respect to the two previously mentioned bodies, CPA

Australia provides the training required of accountants to meet its accreditation requirements. In

the case of the Australian Association of Social Workers, it provides Continuing Professional

Education opportunities which count towards accreditation requirements; however these

requirements may also be met by training accessed from elsewhere.

This latter example would appear to be more relevant to the situation of financial counsellors who

may fulfil their accreditation requirements by accessing training from a number of sources, including

FCRP. In this situation, far from constituting a conflict, this would seem to be a valuable service to

members in providing training opportunities to assist them in fulfilling the requirements of

accreditation. A degree of separation of the management of both would be desirable however in

the interests of good governance.

The issue of conflict of interest relating to the Hotline raised in relation to Option 1 remains valid for

this option also and in fact for all three options. The decision to embark down this path has been

very contentious in the sector, has created potential conflicts of interests for members and in any



case is outside of the scope of the Association’s constitution. Serious consideration will need to be

given to whether direct provision of financial counselling is to remain a role for either the present or

any future association, and if so the constitution of the organisation needs to be amended to reflect

that role.

Essentially the major benefits of bringing the two organisations together into one, either under this

model or that in Option 3, relate to the cost effectiveness issues discussed previously as well as the

potential to get some real cohesion in the support for the maintenance of high professional

standards of financial counselling in Western Australia. The current organisational structures create

role confusion and overlap both to the membership and external bodies and limit the overall

effectiveness of both. Undercurrents of competitiveness in the relationships between the two limit

the potential for the type of fully collaborative partnership that would be needed to achieve this

cohesion of purpose and effort under the current structures.

Option 3 – Creation of a new single entity

Under this option, a new incorporated body would be formed to take over the roles of both existing

organisations, which would both be dissolved once the transition was complete.

The main advantage of this option would be that both organisations would enter this arrangement

on equal terms and neither would be seen as “taking over” the other. This may well be critical to the

willingness of either or both organisations to embrace a single organisation model. The concerns

associated with such a “take over” were canvassed under Option 2.

However the main disadvantage to this model, compared with the model discussed under Option 2,

is the extent of cost and effort required to establish a new incorporated body and dissolve two

others when at least one of the established incorporated organisations has the breadth of mandate

to carry out the functions of both (leaving aside the issue of the Hotline for the moment) and is

comprised of the same membership that is likely to attach to the new organisation. In other words,

apart from the “political” issues referred to above, there would seem to be no major legal or

logistical reason to support this option.

The advantages and disadvantages inherent in moving to a single organisation that were outlined in

Option 2 continue to apply with this option.

3. The merits of a single entity Given the issues outlined above, the preferred model is for a single entity to perform the functions

currently carried out by FCAWA and FCRP. In summary, the reasons for this are:

The combination of the resources and infrastructure of both organisations will remove

unnecessary duplication of roles, infrastructure and processes, thus creating resource

efficiencies, which can then be applied to expanding the current service capacity.

A more cohesive and strategic approach to the goal of raising the professional standards of

financial counselling can be achieved by bringing the policy, accreditation and professional

development roles under the same organisational umbrella.

A single point of contact for both financial counsellors and external agencies will reduce role

confusion and allow a more comprehensive response to issues and needs.



A single point of governance for both organisations will more likely lead to strengthened and

more productive relationships between the two parts and a robust shared vision and

direction.

Before considering which of the pathways to achieving a single entity, as canvassed under options 2

and 3 above, should be adopted it is necessary to define the endpoint to which that pathway should

lead and the related constitutional, governance and funding issues.

Defining the organisation

The first critical question to address is whether the organisation should be a professional association

or a peak body. FCAWA is currently a professional association and FCRP is neither.

To become a peak body would require opening up the membership to the full range of individuals

and organisations with an interest in financial counselling and giving them an equal seat around the

table. This would mean that financial counsellors would lose the benefits of having their own

association and would share membership with their employing organisations among others. Some

immediately apparent consequences of that would be:

Financial counsellors would lose their own independent voice and potentially the ability to

speak freely on issues of concern

Employing agencies would be in a position to directly influence the requirements of

accreditation of staff they employ, potentially a threat to the independence of the

accreditation process.

On the plus side would be potentially a more cohesive voice on behalf of the financial counselling

industry to lobby for the rights of financial counselling service recipients. However it is common for

industry and professional organisations to provide separate voices on social justice issues of this

sort, and often to cooperate closely in this regard. In this respect two voices can sometimes be

more influential than one.

Informal discussions with the chief executive officers of two organisations that provide financial

counselling services revealed little appetite for another peak organisation, with both indicating that

they would be unlikely to join such a body. One commented that his organisation already spends

between $70-80,000 per annum on membership of peaks. Their view was that there should be

fewer peaks rather than more and that WACOSS7 is best positioned to fulfil the role of peak

organisation in relation to financial counselling services. The CEO of WACOSS confirmed that they

regularly bring together organisations from a specific sector around issues of mutual concern and

providing an effective voice for those issues. Both chief executive officers were appreciative of the

valuable roles of both FCAWA and FCRP in contributing to higher professional standards in financial

counselling and saw this as properly the province of a professional association.

There would seem little benefit to be gained from trying to establish the integrated body as a peak

organisation. On the contrary there would appear to be much to lose by forfeiting the current

independent status as a professional association representing financial counsellors. For this reason

7 Western Australian Council of Social Services



the future development of the integrated option will be on the basis of the organisation being a

professional association.

Constitution and governance

Aims

The constitution should state the aims broadly as appropriate to a professional association

concerned with:

representing the interests of its members

advancing and protecting professional standards and integrity through accreditation,

professional development, support and training, and a code of ethics

contributing to social policy development

advocating for social justice

If there were to be the intention to continue to provide direct financial counselling services, then the

aims would also need to accommodate this. For reasons discussed elsewhere in this report, this is

not recommended beyond the term of the current funding contact with FaHCSIA (i.e. 30 June 2011)

and the contract for the one funded position with DCP.

Membership

Membership should be as appropriate to a professional body of financial counsellors, i.e. financial

counsellors who meet the prescribed qualifications for membership.

Governance

The constitution should provide for a Management Committee elected by the membership but with

provision for up to two or three appointed members who bring additional expertise required for

effective governance and management of the organisation. These may be in the areas of law,

accounting, business management, marketing or any other areas where a particular expertise is

relevant to the current situation of the organisation. It is suggested that the maximum size be 7

elected members plus up to 3 appointed members.

It is also suggested that the constitution provide for the creation of subcommittees, to which

outsiders may be seconded, to oversee specific functions on behalf of the organisation. In particular

it is suggested that separate subcommittees be established for Accreditation and Professional

Development and that each of these subcommittees include at least one member of the

Management Committee, plus other members and external representatives with relevant expertise.

Management and staffing

The proposed structure for the organisation is represented in the diagram below.



This structure does not include the Hotline, however if that were to be retained, it would need to

remain separate from the other functions as a fourth arm to the structure. The importance of the

structure is that it separates out the different functions. A brief description of each of the proposed

functions is:

Executive Manager – providing overall strategic direction and day to day management,

reporting to the Committee of Management and subcommittees, managing external

relationships, representing the Association.

Professional Development – Training, advice and support, conferences, resource materials.

Policy & Projects – developing all policy on behalf of the organisation, including accreditation

policy, and undertaking special projects

Administration – office administration, finance and budgeting, and day to day

implementation of membership accreditation.

The allocation of staff positions and time to these functions would require a detailed workload

analysis and job design. That should be undertaken as a transition task.

Pathway to integration

Ultimately the chosen pathway to integration will be determined by the membership of both

organisations. This section outlines a preferred pathway as well as an alternative option.

The preferred option, on the basis of legal and logistical simplicity, is for the functions of FCRP to be

integrated into FCAWA. This would remove the need to create a new incorporated body and the

complex task of transitioning both organisations into the new body. The following steps to

integration are proposed, many of which would occur concurrently:

1) A small integration group be formed to manage the transition project across both

organisations. All funding organisations should be invited to be represented on this

Executive

Manager

Policy &

Projects

Professional

Development

Administration



group and/or be provided with regular updates. This group should draw up a

comprehensive transition project plan.

2) DCP and FaHCSIA should also initiate direct discussions as the two major funders of both

organisations to ensure a coordinated funding approach.

3) A joint memorandum be drawn up between the two organisations detailing the key

principles for transition, i.e. safeguarding those things that are important to each

organisation such as what will happen to existing staff.

4) Work commence immediately on the drafting of required changes to the FCAWA

constitution and towards achieving Public Benevolent Institute status for FCAWA from

the Australian Taxation Office.

5) At the FCAWA AGM changes are adopted to the constitution and a new Management

Committee elected.

6) A resolution is put to the membership of FCRP to approve the proposed plan for

integration.

7) The new position of Executive Manager, FCAWA is created at a suitable level of

remuneration and advertised. It is expected that this would be at a higher level than

either of the current positions.

8) The newly appointed Executive Manager takes responsibility for managing the detailed

transition, including finetuning the organisational structure and developing detailed job

design in consultation with existing staff of both organisations.

9) Negotiations take place with the funding organisations of FCRP to novate their existing

contracts to FCAWA

10) Formal dissolution of FCRP and transfer of assets to FCAWA.

The alternative pathway would be to create a newly incorporated body with a transitional

arrangement that membership of the new organisation be automatically conferred on all eligible

members of the two existing organisations.

Election of a Management Committee for the new organisation would be required whilst

Management Committees for the two existing organisations remained in place for the duration

of the transition period, at the end of which both organisations would be dissolved. In other

respects, most of the steps outlined above in relation to the preferred option would also be

required if this alternative approach were to be taken.

A variation of this was proposed that would have the two current organisations as members of a

newly created umbrella organisation, continuing to operate and administer their current funding

contracts through to their termination dates. Under this proposal the newly formed

organisation would take over the negotiation of new contracts, which would be in its name. This

would be a longer, more gradual path to integration, during which three incorporated bodies

would continue to operate headed by three separate management committees.

As stated earlier, either alternative pathway is likely to be more complex, costly and take longer

than the preferred approach and should only be contemplated if there is no chance of success in

achieving the preferred approach.



4. Additional support services As stated earlier in this report, both organisations have a high reputation among those consulted

including financial counsellors. Particularly highly valued are the legal advice service, professional

development and training, newsletters and the rural conference provided by FCRP: as well as the

online manual, annual conference and accreditation provided by FCAWA. Some suggested areas for

improvement in relation to these include:

A need for the amount of legal support to be increased, including a succession plan in

relation to the current arrangements

Specialised training, e.g. in working with Indigenous people

Continuation of the rural conference as a regular annual event

Extending the training and legal support to non-DCP funded services and to Money

Management Workers

Support for access to supervision, especially by practitioners in rural and remote areas

Less onerous requirements for accreditation, e.g. in single person services

Providing training by members to count towards fulfilling their training requirements for

accreditation

More support to remote and regional counsellors generally

These suggestions are passed on for consideration as a detailed analysis of the merits of each was

beyond the scope of this review.

The other issue, mentioned earlier in this report, and which was raised in a number of quarters is the

need for stronger collaboration with TAFE in relation to access to the Diploma course. As the only

accredited course in Western Australia specifically directed at training financial counsellors, it is

important that there be a strong relationship between the Association and the providers of that

course, both to deal with the specific concerns of members, of which there are a few, and to ensure

that the course properly reflects the training needs for financial counselling in Western Australia.

The prospect of Commonwealth funded traineeships to expand access to the course is an important

opportunity which should not be missed, particularly in the context of a serious shortage of financial

counsellors.

More effective advocacy on conditions of work issues and the very low pay rates for financial

counsellors were also seen as an import priority that should be taken up by the Association.

In addition to these issues of improved support for financial counsellors, a number of those

interviewed, particularly practicing financial counsellors, raised some issues of unmet service needs

of clients. Although outside of the terms of reference of this review, they are included here for the

information of funding bodies.

A lack of free legal services to advocate on behalf of clients was raised frequently as an

important gap in services. Although there are a number of avenues for legal advice, the

means are often not there to support clients in pursuing their legal rights. This means that

the remedies provided by law for their situations are often effectively out of reach.

A second issue was a need for accountancy services to do tax returns for people who have

gone broke, particularly where a failed business is concerned and the tax affairs may be



complex. It was reported that private accountants regularly cease work once it is clear that

the client does not have the capacity to pay.



Chapter 4 – Conclusions and Recommendations In conclusion, there appears to be a strong case for reintegrating FCAWA and FCRP under the one

organisational structure, both in terms of cost effectiveness and providing a more cohesive approach

to the business of establishing and supporting high professional standards of financial counselling in

Western Australia.

The logical organisational structure to undertake this role is that of an independent professional

association of financial counsellors, such as FACWA is currently. There would be no merits in

attempting to extend this mandate to embrace a wider membership in order to achieve peak body

status. Western Australia is already well serviced by peak organisations in the social service industry

and such a move may well compromise the important functions of a professional association.

The most straightforward and logical course to achieve the outcome of single integrated body would

be for the functions of FCRP to be reintegrated under FCAWA, but in the context of changes to the

FCAWA constitution with regard to governance arrangements and a range of other transitional steps

to ensure that issues of key significance to both existing organisations are properly dealt with.

The issue of FCAWA’s venture into service provision through the establishment of the Hotline has

been controversial in a number of quarters, including among members but particularly among

financial counselling agencies. This function is outside of the scope of the aims of the organisation

as defined in the constitution, meaning that there was apparently not the constitutional authority to

enter such a contract. However it would not seem that this invalidates the current contracts, but

would preclude the entering of any future contract without changes to the constitution.8 For

reasons outlined in the report, in particular the perceived incompatibility between the roles of

professional association and standard setter with service provider and employer, it is not

recommended that this occur. This would mean that provision of this service by the Association

would cease at the expiration of the current contracts.

Based on these conclusions the following are recommended:

Recommendation 1

The Financial Counsellors Association of Western Australia and the Financial Counsellors Resource

Project should be integrated under a single organisational structure.

Recommendation 2

The appropriate organisational structure to undertake the role of the integrated body is that of a

professional association of financial counsellors, with membership open only to financial counsellors

who meet the prescribed eligibility requirements.

Recommendation 3

The recommended pathway to reintegration of the two bodies is for the functions of the Financial

Counsellors Resource Project to transfer to the Financial Counsellors Association of Western

Australia, in conjunction with changes to the constitution of the Association and transition

8 See Section 15, Associations Incorporation Act 1987.



arrangements as outlined in Chapter 3 of this report. Alternatively, if this can not be achieved,

creation of a new organisation as outlined under Option 3 in Chapter 3 should be considered as the

second preferred alternative.

Recommendation 4

Funding Departments are advised to ensure that agencies have the power under their constitution

to deliver the proposed services before entering funding contracts.



Appendix 1 – Stakeholder Interviews

Sue Barrett, Liz Smith & Margaret Kerr, FaHCSIA

Charles Brown, Executive Officer, FCAWA

Joanna Carrington, President, FCAWA and Financial Counsellor

Dylan Desaubin, Manager, Consumer Credit Legal Service

Jacqui Ecclestone, Chairperson, FCRP and Financial Counsellor

Fiona Guthrie, Executive Director, Australian Financial Counselling and Credit Reform Association

John Harte, Former President, FCAWA and Financial Counsellor

Diane Hayes, ASIC

Bruce Lovatt, Former Treasurer, FCAWA and Financial Counsellor

Jill Lyall, TAFE

Ian McDonald, Solicitor, FCRP

Andrew Mawby, Public Purposes Trust

Garry Newcome, Department of Commerce

Lee-Ann Read, Membership Secretary, FCAWA and Financial Counsellor

Helen Taplin, Executive Manager, FCRP

Stanley Tse, DCP

Katrina Vernon, DCP

Julie Waylen, DCP

Documents

Review of Financial Counselling Support · PDF fileReview of Financial Counselling Support Services Terry Simpson Page 6 Setting standards for financial counselling, including operating