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Direct credit payment protection for social security clients



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Minister for Social Security Senator Graham Richardson

DIRECT CREDIT PAYMENT PROTECTION FOR SOCIAL SECURITY CLIENTS

Major financial institutions have agreed to severely limit their access to Social Security deposits to cover overdrawn accounts, the Minister for Social Security, Senator Graham Richardson, announced today. .

A 'Code of Operation' for the Department's direct credit payments has been developed with the Australian Bankers' Association, the Australian Federation of Credit Unions Ltd and Funds Transfer Service (Australia) Ltd.

"The new code will protect Social Security clients when their accounts are overdrawn," the Minister said. The code will be introduced from tomorrow (1 October).

"This will ensure people have access to at least 90 per cent of their Social Security* payment in any fortnight even though their account may be overdrawn". ;

He said the new code covered concerns raised by some consumer groups.. ' :

"Direct crediting of Social Security Payments was phased in during the 1980's and the arrangement has brought considerable benefit to clients," the Minister added.

"In particular, it has overcome the problem of cheques being lost or stolen and clients no longer have to wait for cheques to be cleared and they can get their money from automatic teller machines.

"However, because direct credits could be offset automatically against an overdrawn account, Social Security clients could be left with little money to live on.

"The-code addresses that problem," Senator Richardson said.

The new procedures also provide:

* CONSULTATION between "the institution and client on the debt and level of repayment;

* REVIEW of the level of recovery of the debt at the request of the client; and

* LIAISON OFFICERS within the Department of Social Security to deal with any-client difficulties.

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Under the new arrangements there is still no restriction on accounts to which Social Security payments can be made.

Senator Richardson emphasised that the code did not set any particular level of recovery and did not endorse recovery of overdrawn funds without the consent of Social Security clients.

"It does not add to the recovery powers of financial institutions," the Minister said. '

Minister's Office contact: Gregg Borschmann (06) 2777560 Departmental contact: Jim McGregor (06) 2447627

30 September 1991 GR 31/91.