Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697635892099.pdf (Australia)
Level 3, 56 Pitt Street Sydney NSW 2000 Australia +61 2 8298 0417 @austbankers bankers.asn.au 10 November 2015 Dr Kathleen Dermody Secretariat Senate Economics References Committee PO Box 6100 Parliament House CANBERRA ACT 2600 Dear Dr Dermody Economic security for women in retirement The Australian Bankers’ Association (ABA) welcomes the opportunity to make this submission to the Senate Economic References Committee on its inquiry into economic security for women in retirement.
With the active participation of its members, the ABA provides analysis, advice and advocacy for the banking industry and contributes to the development of public policy on banking and other financial services.

The ABA works with government, regulators and other stakeholders to improve public awareness and understanding of the industry’s contribution to the economy and the community, and to ensure Australia’s banking customers continue to benefit from a stable, competitive and accessible banking industry.
Introductory remarks The ABA and our member banks welcome the Committee’s consideration of the gender retirement income gap and examination of measures to provide women with access to adequate and secure retirement incomes.

Consistent with the nature of the inquiry, much of the terms of reference relate to the superannuation system and factors contributing to the superannuation savings gap.
We consider these are important considerations and we offer broad support for initiatives that will improve the rates of women’s participation and savings through superannuation, and therefore, improve the adequacy of women’s retirement incomes.

The ABA believes that the economic security of women is fundamentally impacted by inequities in employment and workforce participation as well as the roles of women in caregiving in our community1.
Women are more likely to have inadequate savings in superannuation.
Policy options to improve superannuation, therefore, could include reforms to recognise differing rates and levels of employment and workforce participation of women; implement measures to address adequacy of savings for women, including support low-income earners, voluntary contributions, and contributions on paid parental leave; clarify anti-discrimination laws and special measures provisions; and encourage other incentives for employers and businesses to help address the gender retirement income gap.
There are also a broader range of issues affecting women’s ability to save, either inside or outside of superannuation, and develop economic wellbeing to ensure an adequate and secure retirement income.

This range of issues affects women, not just in relation to superannuation savings, but more generally, in relation to their participation in financial services (financial inclusion) and their financial resilience.
Our submission sets out some of these issues for consideration by the Committee, to provide additional context for deliberations on superannuation savings and retirement incomes.

1 Women tend to work in occupations with lower wages than men and are more likely to have broken employment and/or non-full time workforce participation due to caregiving and other family responsibilities.

Australian Bankers’ Association Inc. ARBN 117 262 978 (Incorporated in New South Wales) Liability of members is limited.
Economic security for women in retirementSubmission 70 Financial literacy Financial literacy is a vital life skill.

All Australians need to have the knowledge, skills, capability and capacity to understand how to manage their money, build their savings, make sound investment decisions, and manage their debts.

Financial literacy is one of the banking industry’s long-term priorities.
We are committed to continuing to invest in financial literacy programs and activities to help all Australians take control of their money and finances.

The ABA acknowledges the importance of the Australian Government’s Financial Literacy Board and the National Financial Literacy Strategy 2014-2017.
The ABA also supports the role played by the Australian Securities and Investments Commission (ASIC) and the importance of its MoneySmart website which provides useful information to help people make smart choices about money.

The ABA’s Position on Financial Literacy2 was published to support the National Strategy and to reinforce the banking industry’s commitment to financial literacy.
The Position outlines the actions Australia’s banks will pursue to help raise levels of financial literacy in Australia, including leveraging campaigns and partnerships to promote the availability of targeted information for certain groups in our community, such as women.

A number of Australian banks provide, and support, programs and partnerships aimed at building financial capability and savings capacity3.
The ANZ’s fifth survey into Adult Financial Literacy in Australia4 includes a new section on women’s financial attitudes, financial knowledge and financial literacy.

The key findings on the differences for women with regards to their dealings with money, financial aspirations and levels of financial knowledge and numeracy should be used in the development of targeted information and programs for women.
The ABA believes that financial literacy programs should be an integral part of any measures to promote better access to adequate and secure retirement incomes and that the Government should play a continued role in funding financial literacy resources and working with consumer and community groups, educators, the banking and financial services industry, and other businesses to improve women’s financial literacy.

Financial inclusion Access to banking and financial services is an integral part of life.
Australians need access to various financial products and services to enjoy a secure and strong financial future.

The impacts of inadequate access to affordable financial products and services can be far reaching.

The NAB and Centre for Social Impact’s research5 has shown that consumers without access to banking can have difficulty managing the cost of living, difficulty responding to financial shocks, and are more likely to report poorer mental health outcomes.
Financial inclusion can be approached in a number of ways, including assessing a person’s financial resilience and their ability to absorb financial shocks or identifying whether they have access to certain basic financial products, such as a basic transaction account, a small amount of credit (generally a credit card) or basic general insurance.
The G20’s Financial Inclusion Indicators6 includes indicators or access, and use, of financial products and services and are likely to evolve to also include measures of quality of products and delivery.

2 http://www.bankers.asn.au/Consumers/Financial-Literacy 3 For more information, see the ABA’s website at http://www.bankers.asn.au/Consumers/Financial-Literacy.

4 ANZ (2015).
4 ANZ (2015).

‘ANZ Survey of Adult Financial Literacy in Australia.’ http://www.financialliteracy.gov.au/media/558752/research-anz- adultfinancialliteracysurvey2014-fullreport.pdf 5 NAB and Centre for Social Impact (2015).

‘Eight Years on the Fringe: What has it meant to be severely or fully financially excluded in Australia?’ p5.
http://www.csi.edu.au/media/uploads/Eight_Years_on_the_Fringe_FINAL_FINAL.pdf 6 http://www.gpfi.org/featured/g20-basic-set-financial-inclusion-indicators bankers.asn.au | 2 Economic security for women in retirementSubmission 70 Generally, financial exclusion occurs when consumers cannot, or unable, to access the financial products and services they need.
This may be because they lack financial literacy, are unaware of products and services, or do not understand them, or have some restriction impacting their ability to access and use these products and services.

The NAB and Centre for Social Impact’s research has shown that between 2006 and 2013, almost one in six people in Australia were severely or fully financially excluded, that is, they lacked access to two or more basic financial products.
The same research shows that in 2013, 1% of Australians were fully financially excluded, in that they did not have access to any basic financial products, and 15.3% of Australians were severely excluded, in that they had access to only one basic financial product (generally a basic transaction account).7 Those that are fully or severely financial excluded are more likely to be unemployed and, if they were employed, they were slightly more likely to have been employed part-time than full time.
The ABA’s Affordable Banking8 initiative is about making banking more affordable and accessible for Australians.

A number of Australian banks offer a fee free bank account to eligible customers.

The ABA believes that financial inclusion should remain a key policy focus area for Government.
A focus on improving participation in superannuation and retirement income products is important, and should be addressed through a broader framework that also focuses on access to basic financial products and services.
Financial counselling Financial counselling is a public service which assists clients to deal with addressing multiple debts, including from mainstream financial institutions, other lenders (including payday lenders), other creditors (including retailers, utilities and telecommunications companies) as well as managing often complex financial and social problems.
Financial counselling services are vitally important to help individuals and families take control of their financial and personal situations by helping women become more financially resilient and putting them in a stronger financial position to save for their retirement.
For example, financial counsellors often assist marginalised and disadvantaged women in our community, including women vulnerable to, or victims of, domestic and family violence; immigrants, newly arrived women and refugees; and women dealing with addiction and/or mental health issues themselves or in their families.

The ABA believes that women should be supported through adequately funded financial counselling services.
Government funding of financial counselling services should recognise the importance of financial counselling organisations in: Advocating and supporting the delivery of early intervention, financial counselling and retirement and redundancy information services, Providing free, confidential and independent advice and information to people during difficult financial and emotional times, Working with industry, community organisations and government bodies to improve responses for people experiencing financial stress and in financial crisis, and Assisting the Government in meeting the objectives of the Financial Wellbeing and Capability Program.
7 NAB and Centre for Social Impact (2015).

‘Eight Years on the Fringe: What has it meant to be severely or fully financially excluded in Australia?’ p8.
8 http://www.affordablebanking.info/ bankers.asn.au | 3 Economic security for women in retirementSubmission 70 Drivers for financial hardship and reduced savings Financial hardship Financial hardship is when a customer is willing but unable to meet their contractual debt obligations because of unexpected events or unforeseen changes that impacts cash flow.
There are many reasons why individuals and families get into financial difficulty, including unemployment, illness and injury, marriage and relationship breakdown.

Banks have financial hardship programs to support their customers experiencing financial difficulties9.

The banking industry has developed a package of materials to promote best practices in supporting customers who may be experiencing financial difficulties, including industry commitments which go beyond the law10.
In addition, banks have been working with financial counsellors to ensure their hardship programs are effective and respond to the needs of their customers as well as the expectations of our community.

Financial abuse Financial abuse is a serious community issue with far-reaching consequences for individuals and their families.

It occurs when someone misuses money, financial resources, or property or assets without the owner’s knowledge or consent.
Financial abuse can happen to anyone, but some people may be at greater risk, including older Australians, people with a disability, people with a mental illness or experiencing emotional challenges, or people who are socially isolated.

Financial abuse can take many forms and it usually consists of a number of actions over a period of time, rather than a single event.

Financial abuse is sometimes combined with other forms of abuse, neglect or criminal activity.
It may include the following: Stealing, taking or ‘borrowing’ a vulnerable person’s money, debit or credit cards, possessions or property without their knowledge or consent (and with no intent to return the valuables or pay back the money), Forging a vulnerable person’s signature, forcing them to sign a document or misleading them about what they are signing, including blank withdrawal forms, Deceiving, coercing or unduly influencing a vulnerable person to sign or make changes to a will, deed, contract, guarantee or power of attorney, Pressuring a vulnerable person to take out a loan or a product so they can personally benefit without taking on the risk (e.g.
having a vulnerable person take out a mortgage, a shared equity loan, a reverse mortgage, or invest in ‘too good to be true’ investments), and Requiring a vulnerable person to pay for their expenses (e.g.

someone shares a home with them and does not contribute to bills, maintenance and other expenses).

Older women face particular risks in relation to financial abuse, unfortunately by their children, other family members and other caregivers.
It is important that older women have the skills necessary to manage their money and structure their banking and financial affairs so they maintain their financial independence and autonomy and protect themselves from financial risk.

A key risk for financial abuse of older persons is inadequacies and inconsistencies in the regimes governing Power of Attorney instruments across the States and Territories, and other formal arrangements for substituted and supported financial decision making.
The banking industry has developed a package of materials to promote good practice and clearer processes for banks so they can better support customers who may be vulnerable to financial abuse, or who want to plan ahead and manage their financial affairs, especially as they get older11.

9 For more information, see the ABA’s Doing It Tough website at http://www.doingittough.info/.
10 For more information, see the ABA’s website at http://www.bankers.asn.au/Consumers/Are-you-experiencing-financial-difficulty-.

11 For more information, see the ABA’s website at http://www.bankers.asn.au/Consumers/Financial-abuse-prevention.
bankers.asn.au | 4 Economic security for women in retirementSubmission 70 Domestic and family violence and financial abuse Financial abuse is also a ‘form of family violence that negatively impacts a person financially and undermines their efforts to become economically independent’12.

There is growing recognition of the ongoing consequences of financial abuse in the context of domestic and family violence, particularly on the ability for women to achieve longer term financial stability and security.
These consequences for victims can include: Limited opportunity to engage in regular employment, Reduced capacity to build savings, Being left solely responsible and/or liable for joint debts following relationship breakdown (including ‘sexually transmitted debt’), Poor credit histories as a result of taking out a loan for an abusive partner, and Becoming homeless or facing long-term financial hardship.
The banking industry is concerned about financial abuse as it relates to domestic and family violence and is working with, and supporting, community groups to develop tools and resources to help women and other victims.
The ABA believes that the Government should: Ensure banks and other financial institutions and creditors have in place adequate financial hardship programs to support their customers during times of financial difficulty, Harmonise laws across jurisdictions, develop nationally-recognised instruments, and implement a national register for formal arrangements, Promote greater community awareness about financial abuse through a national consumer education campaign, and Support measures to address financial abuse, particularly in the context of domestic and family violence and financial abuse of older women, as an integral part of any measures to promote better access to adequate and secure retirement incomes.
Concluding remarks The ABA trusts this submission assists the Committee with its deliberations on the gender retirement income gap and examination of measures to provide women with access to adequate and secure retirement incomes.

We consider that financial independence and economic wellbeing must address the broader considerations which impact on the capacity and capability of women to build their savings pre-retirement and manage their finances post-retirement.
We would welcome the opportunity to meet with you to discuss the implementation of these very important proposals to help address the gender retirement income gap.

Yours sincerely Diane Tate Executive Director – Retail Policy 12 Camilleri, O; Corrie T; and Moore S (2015), ‘Restoring Financial Safety: Legal Responses to Economic Abuse’.

Good Shepherd Australia New Zealand and Wyndham Legal Service.
p7 https://www.goodshepvic.org.au/Assets/Files/Restoring_Financial_Safety- Legal_responses_to_economic_abuse_Web.pdf bankers.asn.au | 5 Economic security for women in retirementSubmission 70