Australian Financial: Banking
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Banks: provide a range of savings and borrowing and investment products and services to their customers.

Credit Unions: Generally provide a similar level of savings and credit facilities to their members (their membership may be restricted to a particular profession or location);

Building Societies: offer savings and borrowing options with their primary product being home loans;

Mortgage providers: primarily lending institutions (rather than savings banks). They lend you the money (for a home mortgage) and you pay them back over a number

ACCOUNTS

Accounts vary considerably from one provider to the next and they can vary greatly within the one company. You need to look at the range of products available from your chosen provider and weigh them up against your saving/spending pattern. Very few accounts pay significant interest on small balances and some pay no interest at all for balances under a specified amount. Some insist that you maintain a balance over a certain level for the entire statement period. Some have fee-free accounts and some have accounts that offer more if you have a 'bundle' of products - like your home loan and credit card, with the same provider.

INVESTING

Only deal with advisers who operate under an Australian Financial Services Licence issued by ASIC. Check ASICs database to make sure the financial advisory business is licensed. The Financial Planners Association of Australia Ltd can direct you where to find an authorised financial planner in your area.

The Australian Government has passed into law a series of requirements that financial advisers have to comply with. This legislation is called the Financial Services Reform Act 2001 and it sets out the standards of training and conduct that financial advisers must meet. This law was created to give consumers protection and confidence in their financial dealings. The Financial Services Reform Act requires a financial service provider to give customers a written statement setting out the terms and basis of their services, called a 'Financial Services Guide' (FSG). The law requires financial advisers to give their customers all reasonable information about their advice called a 'Statement of Advice'. The advisers also have to tell their customers if there is any conflict of interest and how they are being paid for providing their advice. That means, if the adviser is receiving money or some other benefit by suggesting a particular product or company; they are obliged to tell you, so that you can make an informed and safe decision before investing your money.Your financial adviser must also give you a 'Product Disclosure Statement' which gives all the essential details of the product they are suggesting you use. Your adviser, or product provider, must also give you details of their complaint resolution procedures and of the independent complaint schemes that the law requires them to belong to.

BANKRUPTCY

Bankrupt means 'insolvent' or 'unable to pay your debts or meet your commitments'. Being declared bankrupt is very serious and can permanently affect your ability to get credit. A creditor can apply to the courts to have a debtor declared bankrupt if the debtor defaults on the debt and has no obvious means of being able to pay the debt. The minimum amount for which you can be considererd bankrupt is $2,000. If one can’t pay his debts, and can’t see any practical way of being able to pay them in the future, then he should contact a financial counsellor for assistance or the nearest ITSA (Insolvency and Trustee Service Australia) office for information.

ITSA is the government agency responsible for the personal insolvency system. Depending upon your individual circumstances you may wish to enter into a ‘Debt Agreement’ with your creditors or file for your bankruptcy. Once bankruptcy has been declared, a trustee will be appointed to look after your affairs. A trustee’s primary role is to recover assets from the bankrupt for the benefit of the creditors. Very few assets are exempt from recovery, some examples are personal items, tools of trade, compensation payments and a mode of transport of a reasonable value.

A trustee has extensive powers for recovery under the Bankruptcy Act e.g. they can garnishee your wages (i.e. the trustee can order an amount of money be taken directly out of your wages for a period of time) or liquidate (sell) some of your property. A bankrupt is automatically discharged three years after they have lodged their completed Statement of Affairs (SOA) provided there is no objection to their discharge.

A SOA is a document detailing the financial affairs of a bankrupt. Being declared bankrupt or entering into a Debt Agreement also means that your details will be on the public record and you will be reported to a credit reporting agency where you will remain listed for generally 7 years. During bankruptcy, if you apply for credit of $3,000 or more, you must tell the credit provider that you are bankrupt. Bankruptcy has the effect of wiping out most of the debts that existed at the time of your bankruptcy, however, it does not include debts such as child support payments, court penalties or fines, student loans or HECS and social security overpayments.

You will still be liable for any future liabilities i.e. debts incurred after the date of bankruptcy. You will need to organise payments for essential services such as electricity and gas or phone services, otherwise, they may be recorded as new debts for which you can be made bankrupt again.

STORE CREDIT

Most major retail chain stores have their own credit arrangements and you can easily open an account with their your preferred retailer providing if you have a good income and good credit standing. You will probably get a card, which allows you to buy now and pay later, and you will get monthly statements and fees on your account. Usually, you are not actually borrowing from the store itself, you are borrowing from their finance provider. In many cases this is an entirely different company specialising in finance and credit. Be sure to compare the percentage interest rate with other forms of borrowing - including the credit cards your bank can give you. You will normally find that these store accounts are charging a much higher interest rate than some other forms of credit. This could mean that, if you don’t pay your account off immediately and entirely, your purchase goes on costing you money as long as any outstanding balance remains on your account.

INTEREST-FREE and NO FURTHER PAYMENTS

Be sure to read the terms and conditions thoroughly before agreeing to them. Just like other credit arrangement, if you borrow money you have to pay some 'fee' for the privilege. When the offer is 'so many months interest free' and you haven’t paid off the full amount within that period, you will often be hit for the full interest bill, backdated to the date of purchase, plus ongoing interest charges until the purchase is paid in full. Even if you only have to pay a fee to delay the payment, you will still be paying more than the ticket price for your purchase. You will also find it’s more likely than not that your purchase is still attracting interest, at a high rate during the period that you are making 'no further payment' and the interest goes onto the bill at the end of the offer.

LAY-AWAY or LAY BY

Many retailers let you buy things whereby you pay a deposit of a percentage of the total cost (usually five or ten per cent) and pay for the item over an agreed time period - three months, six months, or a longer period for big-ticket items. The retailer keeps your purchase during the time you are paying off the lay by and you get to take it home when you have paid the final instalment. LAY-AWAYS or LAY-BUYS usually allow you to pay off whatever amount you can afford, when you can afford it and they don’t normally involve interest payments or fees. For these reasons, buying things in this manner makes a lot of sense if you don’t need the item right now.

HELPFULL LINKS:

Banking and Financial Services Ombudsman - The Banking and Financial Services Ombudsman deals with complaints from the public about the banking industry.

Credit Ombudsman Service Limited - The Credit Ombudsman Service Limited helps settle disputes you may have with a mortgage provider.

Australian Securities and Investments Commission - The Australian Securities and Investments Commission (ASIC) is the regulatory body dealing with companies and the consumer protection regulator for financial services.

Financial Counselors