Millions unable to access basic financial tools
More than three million Australians suffer severe or full financial exclusion and are unable to access a basic transaction account, moderate amount of credit or general insurance.
According to research conducted by the National Australia Bank (NAB) and the Centre for Social Impact (CSI), the number of Australians who are financially excluded in some way has grown from 15.6 per cent to 17.7 per cent of the population.
Financial inclusion refers to the ability to access these basic financial tools, with severe exclusions being an inability to access any two of three tools and full exclusion being the inability to access any of them.
The research showed the cost of maintaining basic financial services has fallen from previous years, with the average costs at $1739 per year. The research found that for nearly 9 per cent of the population this was equal to more than 15 per cent of their annual income, and for a further 9 percent this figure was 10-15 per cent of their annual income.
CSI Research Associate Chris Connolly said cost had to be considered alongside other barriers, such as difficulties with language and identification documents, a general lack of financial literacy and changes in employment arrangements, which all contributed to the growth in financial exclusion.
"Younger Australians and migrants are particularly marginalised. The casualisation of our workforce is compounding the issue, with increasing numbers of people engaged in low-paying casual, part-time or seasonal work," Connolly said.
According to the research, young adults aged 18-24, migrants and people engaged in low-paying casual, part-time and seasonal work are the most excluded, as are many Aboriginal and Torres Straight Islanders. The research shows 43.1 per cent of the latter group suffer some form of exclusion.
The costs and complexity of insurance products also keep people with low incomes from accessing appropriate insurance. A geographical breakdown highlighted that areas with low levels of insurance were usually inner-city areas of the large capital cities or extremely remote areas.
The NAB/CSI Financial Exclusion Indicator research was drawn from face-to-face interviews with 50,000 Australians, and additional online surveys of a further 1500 people.
NAB Group Executive Personal Banking, Gavin Slater, said the banking sector needed to be involved in finding solutions to the financial exclusion problem.
AUTHOR
Staff Writer
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.
