Sylvan Review Data Collection

In April 2021, during the COVID-19 pandemic, one-in-five Australians reported being in financial distress (i.e., having difficulty paying for essential goods and services). In addition to the economic implications, financial distress has also been linked to a variety of other adverse outcomes for individuals (e.g., depression and anxiety), their partners (e.g., increased instances of domestic violence)1 and their children (e.g., lower levels of academic achievement). One way to assist individuals experiencing financial distress is through financial counselling. 

Financial counsellors provide independent advice, advocacy and casework to people experiencing financial distress. Financial counsellors provide this service at no cost to those experiencing financial distress. Historically, financial counsellors have been largely funded by a combination of subsidies from the Commonwealth Government, and various the State and Territory Governments around Australia. 

The Banking Royal Commission highlighted the importance of financial counselling services. Broadly speaking, the Banking Royal Commission’s justification for the importance of financial counselling was to balance the information asymmetry between the financial services industry and consumers. The Commission was, however, largely silent as to how financial counselling services should be funded into the future. In order to answer this question, the Countervailing Power: Review of the coordination and funding for financial counselling services across Australia (the Sylvan Review) was published on 3 October 2019.  

One of the Sylvan Review’s principal findings was that existing funding arrangements were insufficient to meet the level of unmet demand. To help address this issue, the Sylvan Review recommended the development of an industry funding model so that relevant industries that contribute to the demand for financial counselling services and benefit from their customers accessing these services, can also provide funding to help address unmet demand for services. Importantly, this funding from industry would be in addition to existing government funding. Following publication of the Sylvan Review, the Department of Social Services began work operationalising the recommendation for an industry funding model. 

The concept of an industry funding model raised two important policy questions:  

1. What is the total amount of funds to be raised under the model (i.e., the quantum of funding)? 

1. What should be the (relative) contribution of firms included in the model?  

The Department of Social Services contracted ARTD Consultants to answer these questions. 

To answer these questions, working in consultation with the Department of Social Services and Financial Counselling Australia, we developed two data collection tools. Each tool sought to collect information that could be used to answer one of the questions outlined earlier.  

The first tool sought to measure the total number of individuals requesting financial counselling services over a representative period. Using this information, we then classified individuals has having ‘met demand’ or ‘unmet demand’ based on the time between requesting and receiving financial counselling. This enabled us to calculate the ‘total demand’ for a financial counsellor’s time. To estimate the quantum of funding required to meet total demand, we multiplied the number of full-time equivalent financial counsellors required to meet total demand by their annual salary. 

The second tool sought to measure the amount of time financial counsellors spend on issues that can be traced back to specific types of business (e.g., banks, buy-now-pay-later providers, utility firms). Using this information, we then calculated the relative (i.e., proportionate) amount of time a financial counsellor spends on various issues. This enabled us to divide the total supply of a financial counsellor’s time between different types of businesses. Using that information, we were able to provide the Department of Social Services with options for the size of contribution each class of business should make to the fund. 

On 21 November 2023, the Hon Amanda Rishworth MP announced the establishment of an Industry Funding Model for financial counsellors. To date, the government has secured over $35 million in funding for financial counselling services over three years.