Financial Hardship Project

Project Overview

The Financial Hardship Project is an initiative of the Centre for Corporate Law at the Melbourne Law School, The University of Melbourne. The project is the first in-depth study of the practical operation of Australia's financial hardship laws.

Research Grant

Project title: The Legal and Social Dimensions of Financial Hardship in Australia: Implications for Legal, Regulatory and Policy Frameworks

Type of grant: Australian Research Council Discovery Grant

Funds received: $396 000

Project Aims

Financial hardship – the reduced ability to meet monetary obligations because of loss of employment, illness or disaster – is an increasing problem for both low-income and middle-income Australians. The Financial Hardship Project involves an analysis of the full range of legal frameworks that provide protection for Australians suffering financial hardship, as well as an empirical analysis of how these frameworks operate in practice.

In light of the limited legal and policy research in this area to date, the Financial Hardship Project has four principal aims:

  • To undertake a comprehensive, comparative analysis of the statutory frameworks – and in particular, the National Credit Code under the National Consumer Credit Protection Act 2009 (Cth) – that are explicitly designed to protect Australians suffering financial hardship. The project will include research into the dispute resolution schemes that form part of these frameworks, as well as codes of conduct voluntarily adopted by industries.
  • To carry out an in-depth multi-dimensional empirical study – using focus group interviews and written surveys – to investigate how these frameworks are understood and negotiated by Australians suffering financial hardship.
  • To evaluate, based on the empirical study, whether these legal frameworks and codes of conduct are meeting their policy objectives, and to examine the legal and social consequences of financial hardship.
  • To draw conclusions as to whether reform to the legal frameworks is required to address any deficiencies in the existing financial hardship provisions.

For further information, please contact the project Research Fellow, Evgenia Bourova.

Research Team

Professor Ian Ramsay (Chief Investigator)

Ian Ramsay is the Harold Ford Professor of Commercial Law at the Melbourne Law School, The University of Melbourne, where he is Director of the Centre for Corporate Law. For further information, please refer to Professor Ramsay's profile on Our Staff webpage.

Associate Professor Paul Ali (Chief Investigator)

Dr Paul Ali is an Associate Professor at the Melbourne Law School, The University of Melbourne. For further information, please refer to Dr Ali's profile on Our Staff webpage.

Evgenia Bourova (Research Fellow)

Evgenia Bourova commenced work as a Research Fellow at the Centre for Corporate Law in March 2014. For further information, please refer to Evgenia's profile on Our Staff webpage.

Current Status

The first stage of the Financial Hardship Project was completed between March 2014 and March 2015. This stage involved a comprehensive analysis of the entirety of Australia's financial hardship provisions, followed by the design of a qualitative and quantitative empirical study to determine how these provisions operate in practice.

The second stage of the project involved the execution of the empirical study. Between June and September 2015, we carried out an online survey of over 1,000 Australians who have experienced financial hardship, as well as a survey of financial counsellors around Australia.

Between November 2015 and January 2018, we also held focus group interviews with financial counsellors, consumer solicitors and case workers employed by and associated with organisations working at the forefront of assisting people in financial difficulty. These organisations included Consumer Action Law CentreGood Shepherd Australia New Zealand and Financial Counselling Australia, as well as DiversitatLentara UnitingCareSouth East Community Links and Women’s Information and Referral Exchange Inc (WIRE). The focus group interviews covered topics such as the causes and impacts of financial hardship for Australians at different levels of income, as well as specific groups such as women with debt problems caused by economic abuse, people living in rural or regional areas, and recent migrants and refugees from a non-English speaking background.

As part of the second stage of the project, we also carried out a smaller study of data collected by the Financial Ombudsman Service on financial difficulty disputes resolved between 2010 and 2014; and an analysis of the legal frameworks for reporting on hardship practice in the consumer credit and energy sectors.

The third stage of the project was completed in June 2018. This stage involved the preparation of research reports and journal articles drawing on the findings of the empirical study, and making recommendations for law and policy reform. Some of these are available below. More publications will become available in the coming months.

Publications

Links and Resources

The key sectors where financial hardship protections have been put in place are consumer credit, essential services and telecommunications. The hardship protections that apply to each of these sectors are outlined in our 2014 research report, ‘Financial Hardship: The Legal Frameworks’, which is cited above.

a. Consumer Credit

The primary statutory framework that provides protections for Australians suffering from financial hardship is established by the National Credit Code, which is scheduled to the National Consumer Protection Act 2009 (Cth).

  • In particular, s 72 of the Code gives consumers the right to apply to their credit provider for a variation of the terms of their credit contract on the grounds of financial hardship.
  • For further information about the external dispute resolution scheme available to consumers of financial services, please refer to the website of the Australian Financial Complaints Authority (AFCA).

For some of the key examples of self-regulatory codes of conduct containing hardship provisions in the banking and finance sectors, please refer to the following resources:

  • The Australian Bankers' Association (ABA)'s revised Code of Banking Practice 2013, effective from 1 February 2014; and
  • The Mortgage and Finance Association of Australia (MFAA)'s Code of Practice, effective from 4 September 2016.

b. Essential Services

At state level, there are also protections for people experiencing difficulties in paying for essential services such as electricity, gas and water due to financial hardship. For examples of hardship protections that apply to essential services customers, please refer to the following statutory provisions and industry codes:

For more information on hardship protections in the essential services sector, please refer to the websites of regulators and ombudsman services such as the Australian Energy Regulator, the Energy and Water Ombudsman Victoria and the Economic Regulation Authority Western Australia.

c. Telecommunications