PODCAST: Financial hardship – lessons from COVID-19

Just over a year ago, our lives and the economy were upended overnight as lockdowns and restrictions swept across the world in response to the COVID-19 pandemic.

Fiona Guthrie AM, CEO Financial Counselling Australia, believes there are lessons we learnt during that time which should inform our response to customers experiencing ongoing financial difficulty, lessons which can help them to feel supported as we edge back to ‘normality’.

{CF_AUDIO}

Financial counsellors work with clients who are experiencing financial hardship, helping them to get back on their feet. What will help one person may be different to the next but could involve negotiating reduced repayment arrangements or making sure people are receiving the right concessions through to advice about bankruptcy.

Surprisingly, one of the trends Guthrie saw during 2020 was many low-income Australians were experiencing reduced financial pressures.

“We actually had fewer people calling the National Debt Helpline or seeking phone or face-to-face financial counselling because of the great government and industry support packages,” she says. “They provided a cushion and helped people get through the most difficult time that they had possibly experienced in their lifetimes.”

Guthrie says for the first time, thousands of people had enough money to make ends meet: “If you ever needed evidence the cause of financial hardship is just not having enough money, we've just seen it. We've just had a big social experiment.”

Talking money

Admitting you need help with managing your money is difficult and, as Guthrie notes, it’s understandable people can be uncomfortable discussing money with others, especially those they don’t know.

“Money is such a taboo subject. We don't talk about how much we earn. We don't tell people about when we're experiencing financial hardship. We put on a brave face to the world,” Guthrie says.

“Financial wellbeing and emotional wellbeing - those two things are so linked.”

In terms of making sure customers feel supported, Guthrie believes the financial industry led the way during the pandemic.

“If you take yourself back to the uncertainty and overwhelming experiences we were all having in March and April of 2020, the [financial] industry came out very quickly and said ‘we are going to provide loan deferrals to our mortgage customers.’”

Various support options were also available for people with unsecured credit cards and personal loans.

“I think that was absolutely seminal in creating a sense of stability for people,” she says. “You provided a breathing space that took a weight off people's minds and it was incredibly important and sent a signal to other industries as well - so then we had the electricity industry and telecommunications industry, we had landlords - everybody pulled together to make sure we could get through this.”

Flexibility

Guthrie hopes to see continued flexibility for customers in financial hardship beyond the pandemic.

“What the pandemic has done is that it's alerted every single industry to the need to make sure their financial hardship practices are not second to other parts of the business … Obviously, utilities are starting to introduce disconnections again. The same thing will be happening with rents increasing…”

As the economy gets back on track, Guthrie wants to make sure people won’t be left behind.

“We're worried about what might happen to people who are still not going to be able to get back on track …. we don't want them to be forgotten,” she says. “We don't want to go back to that sort of normal. We want banks to be with people for as long as they possibly can be.”

Just as medical experts are recognising the ongoing, debilitating impact on some who have had COVID, there are long term financial implications from the economic shock.

“There are people who are going to be affected really long-term from the pandemic and they need our support and they need to be treated fairly”, Guthrie says.

“This is an ongoing discussion about how financial hardship should change as a result of the pandemic.”

Looking forward

It is said hindsight is 20:20 and for Fiona Guthrie there are many things we can all take with us from 2020 into the future.

“We've got some learnings we need to take out of 2020 … believe people, work with them, walk beside them, treat them with empathy… be consistent with your purpose and treat people fairly. If we do those things, then we'll be well placed to lead Australia into a better place. We don't want to go through the hell of 2020 and not have something good to show at the end of it.”

Related articles