Indigenous consumers deserve better from financial services

In the wake of the commission, Professor Robynne Quiggin says evidence-based policy and more effective resourcing are needed to ensure financial institutions adapt their operations better to the day-to- day circumstances of Indigenous people’s lives. She also argues there’s a need for stronger regulation and penalties to deter sharp practice and punish illegal conduct.

“For those of us who advocate for Indigenous consumers of financial services, it was both a relief and distressing to hear the evidence given at the royal commission,” she says.

Aboriginal and Torres Strait Islander peoples face barriers to accessing mainstream banking, credit, insurance and superannuation services, Professor Quiggin says. “That’s particularly true where the products and services are not fit for purpose, or where the services are inaccessible.

“We are also keen to improve the information about different financial products so consumers are better informed and can compare their options,” she says.

Professor Quiggin and colleagues are now undertaking research in Western Sydney to understand more about consumer behaviour in relation to pay-day lending and “rent to buy” arrangements, which she says are often very costly for consumers. “The aim is to develop and test effective consumer information,” she says.

The royal commission also heard evidence from Financial Counselling Australia that many Indigenous people live hundreds of kilometres from branches and in seeking physical access to financial services are likely to confront poor roads, unreliable transport and wet weather that may cut them off for months at a time.

Consumer advocates also spoke of language barriers where English is the third or fourth language spoken, with product features like interest rates and insurance premiums not clearly explained or well understood.

Cultural and family or kinship obligations also need to be factored into products and services.

“Cultural and family or kinship obligations also need to be factored into products and services to meet the needs of Indigenous customers and members,” Professor Quiggin says. “Cultural and family obligations can provide a very effective financial safety net for Indigenous people in times of financial need. But sometimes, they can adversely impact by stretching the limited resources of particular people. These relationships need to be understood by front-line and policy staff.”

For example, cultural obligations and extended family relationships need to be considered when superannuation is paid upon a person’s passing. “In the absence of a nominated beneficiary, proper respect for cultural and family relationships may require the superannuation be paid to someone other than the usual legally recognised beneficiaries. It may be, perhaps, an Aunt or Uncle who can appropriately distribute across the family,” she notes.

Some good work has been done, she says, such as a fee-free ATMs trial in remote areas, but more work is needed to address structural issues. “We need the sector to give a sustained commitment to being informed, innovative and willing to develop and resource effective options.”

Engagement in the economy depends on access to our financial services system, Professor Quiggin says. “Indigenous Australians have much to offer and much to gain from a suitably adapted system, relatively safe from predatory practices. We all hope the royal commission will bring renewed enthusiasm for informed, innovative adaptations that take Indigenous peoples’ circumstances into account and increase our participation.”

UTS Experts: Robynne Quiggin