We meet with banks, utilities, telcos, insurance companies and debt collectors to discuss their responses to people experiencing financial hardship. We also provide policy input to state and national regulators, including ASIC and the ACCC, as well as ombudsmen schemes and Centrelink. 

In particular, we are really concerned that when people experience financial hardship, creditors expect them to put every last cent toward their debts. But unexpected expenses will inevitably occur and this approach is actually counterproductive. As a rule of thumb, we believe a savings buffer of 10% of income or $20 per month would go a long way to helping people manage life's financial ups and downs.

It is perplexing that when someone applies for credit, standard income and expenditure statements don't include a savings category. This sends exactly the wrong message. A savings category/buffer would help people meet unexpected expenses without falling behind on their repayments.

We also recognise that some people in financial hardship have no spare income. Financial institutions could still assist this group of people by providing incentive schemes, so that if debt repayments are met, the debt reduces by the agreed amount, and a portion of the repayment is put toward a savings account. This policy is outlined in the FCA's publication Everyone Needs a Savings Buffer.

Australia's credit laws require credit providers to lend responsibly. In our view, the inclusion of a savings buffer in assessing a person's capacity to repay a loan is a fundamental component of responsible lending.

We continue our exposé into the payday lending industry (small amount credit contracts or fast loans) and the misery that short-term, high cost loans can cause for people on low or variable incomes or who have unexpected expenses. High cost, predatory loans trap people in a cycle of debt.

Consumer leases, also known as rent-to-buy contracts, are another form of high cost credit that often cause harm.

In addition to advocating for regulatory reform of payday lending and rent-to-buy laws, we encourage greater access and promotion of different options, including the No Interest Loan Scheme.

Centrepay is a free bill-paying service for people who receive a Centrelink benefit. Payments for bills, such as rent, are deducted from Centrelink payments with the remaining funds credited to a person's bank account.

Unfortunately Centrepay has moved away from its original purpose of being for essential items, such as rent and utilities, and was opened up to all sorts of businesses. The most concerning are consumer lease providers. Consumer leases are a form of high cost credit used to obtain household and other goods. However, the goods end up costing between three and five times the retail price, with interest rates in the hundreds of percent.

As one financial counsellor said, "There is no point in getting a consumer lease to buy a fridge if there is no money for the electricity."

We want to see consumer lease providers removed from Centrepay. This would force these providers to lend more responsibly.

Financial institutions can also play a role by supporting the expansion of the No Interest Loan Scheme and offering low interest rate loans.