Most financial mentors report working with clients with complex needs beyond financial issues. Photo: 123RF
Financial mentors are feeling overworked and overwhelmed by the deep economic pressures and complicated issues facing people struggling to repay debt.
Debt purchaser firm DebtManagers commissioned an independent report on the pressures faced by frontline financial mentors, who worked with an average of 40 clients a month, as part of the debt collection process.
"Everyday Kiwis are facing tremendous pressure, matched only by the pressure on the sector itself. Embarrassment and shame are major inhibitors to seeking help," DebtManagers general manager Isaac Manase said.
"I think the reality of the economy is there's always going to be difficult debt... but there's got to be a better way to deal with those customers."
The national survey of 151 practitioners indicated 46 percent felt they were overworked, with 83 percent working with clients with complex needs beyond financial issues, such as relationship problems, job loss and mental illness.
Nearly two thirds (65 percent) were seeing more indebted middle-income clients.
Ninety-one percent of practitioners considered face-to-face contact as the most effective channel for engaging on difficult debt issues, though only 13 percent felt the current funding model fully supported their work.
Nearly a third (31 percent) said funding hardly supported or did not support their work at all.
"We all have a role to play in lifting financial wellbeing, and we hope this eye-opening report is the start of a deeper, more meaningful conversation about the sector, regulations, policy settings, and how we all work together to achieve that," Manase said.
"Reaching out early matters, but many people don't engage because they feel ashamed, embarrassed, or whakamā, or simply overwhelmed.
"Compounding this is a concerning lack of awareness that free support is available through financial mentors."
Code of conduct would help
He said an industry code of practice would be helpful.
"It's actually in everyone's interest to get these people back on their feet. And I think the challenge is, there's a lot of corporates and government bodies that are all trying to do their bit to work out what's best.
"But because we're not consistent, it actually means that a customer who's in difficult debt is working through different processes for different types of debt to different outcomes, and that actually adds to the stress and adds to the overwhelm and the shame, which is, which is kind of what's highlighted in the report."
He said early intervention was beneficial, though resources were stretched, particularly in rural and high-deprivation communities where there may only be small, part time teams available.
"And inconsistent processes can slow progress even when people are ready to engage," Manase said, adding the report set out a number of recommendations for change, as follows.
Recommendations
- Build a consistent and compassionate sector.
- Establish clear national standards for conduct for government, creditors and collections.
- Strengthen the foundation of practice with better resourcing and more awareness.
- Align wider policy settings for financial stability to address the gap between income and real living costs.
- Human connection should be amplified, not replaced, by technology efficiencies.
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