If you were asked to name one group in financial services which receives even more bad press than financial planners who might they be? Without much reflection payday lenders must be near the top of the list. So how would you rate a plan to licence them to offer financial advice and even sell insurance and annuities to their customer base?
It’s really happening, not quite yet in Australia, but the US state of Wisconsin under Republican policies to loosen regulations around such services. Read more in the Journal Sentinel, here.
And one of the companies pushing for the liberalisation of consumer protections says it’s all to bring better access to financial services to traditionally under-served communities. It is an amazing and crazy idea hardly reinforced by the disclosures payday loan companies are generous donors to Republican candidates campaigns.
Such a notion presumably couldn’t happen here but it highlights the enduring problem about how some of the most marginalised and vulnerable in the community area are meant to get financial guidance. Closer to home the ABC reported this week on how after 25 years the Financial Counselling Hunter Valley Project was facing the axe with only three months of state government funding left.
There’s a dreaded review of all such financial counselling across the state. The project manager Maria Hatch says those least able to afford it could have to pay for help around budgets and bankruptcy. “Even just to do a budget, if they can't work out a budget for themselves, they're going to have to pay,” she said. "Places out there now charge huge amounts, copious amounts of money to provide exactly what we do for free.” The local Labor MP is going into bat for the service.
Both instances highlight the issues for those from Milwaukee to Muswellbrook who are currently quite unable to afford financial advice but who in many ways need it. It’s just allowing payday lenders to occupy the space of even the most poorly-qualified financial planner, is an idea well ahead of any time.
The fight continues for the Hunter in 2018, with MPs calling for legislation "sitting on the Turnbull government's tables for more than a year"to be implemented. The battle also continues in the US. Kailey Fralick, of the Motley Fool, gives 11 alternatives to payday loans, here.
by Christopher Zinn, Communications & Campaigns Director, Adviser Ratings