Regulatory landscape

Financial counsellors are employed by agencies, typically not-for-profit community organisations, that operate under specific sub-regulations of the Corporations Regulations 2001 and the National Consumer Credit Protection Regulations 2010.

These sub-regulations permit organisations to provide financial counselling services without holding a financial services or credit licence, provided the services are delivered by trained, qualified and professionally accredited financial counsellors.

The conditions of the exemption require the financial counselling service to be free, independent and free from conflict. The requirement for no conflict means industry cannot directly fund financial counselling positions, which are primarily funded by state or federal governments, or through philanthropic sources.

To be eligible for the licensing exemption, the financial counselling agency must ensure that it satisfies the following conditions:

1. Financial counsellors do not give advice to clients about purchasing investment products, such as shares or managed investments;
2. No fees or charges are paid by clients for any aspect of the financial counselling service;
3. The financial counselling agency is likewise unable to be remunerated, including by commission, directly or indirectly in relation to any action of the client;
4. The financial counselling agency does not operate or participate in a financial services business beyond the scope of this relief, and takes all reasonable steps to ensure that none of its employees does so;
5. Individual financial counsellors must also be members of, or be eligible to be members of, a State or Territory financial counselling body. Membership requirements set standards for conflicts of interest, professional requirements and conduct;
6. Financial counsellors must be appropriately educated.

Restriction on the use of the terms “financial counsellor” and “financial counselling”

The National Consumer Credit Protection Act 2009 restricts the use of the terms “financial counsellor” and “financial counselling”, and similar terms with similar meaning. The restriction means that only financial counselling agencies that meet the exemption from holding an Australian Credit Licence can use the restricted terms.

Financial counsellors provide free, confidential and independent services. The purpose of the restriction is to ensure that Credit Licence holders who are not financial counsellors do not mislead people by representing their services as financial counselling (when they are not).